The Justice Department and the Consumer Financial Protection Bureau are suing a real estate developer over an alleged bait-and-switch land-sale scheme near Houston. The developer used TikTok and other social media sites to lure Hispanic immigrants into predatory loans, the government alleges.

Companies on mello’s roster now include Lumio, a solar energy provider, and Bosscat, a real estate data platform revolutionizing home services.

Indicators are starting to align, that with falling interest rates and prices, buyers and sellers will return to the housing market in 2024, a trio of interested parties commented.

Activity fell despite an ongoing slide in rates, but elevated interest in VA loans, particularly refinances, managed to lift the government-sponsored index higher by a fraction, the Mortgage Bankers Association said.

Contract closings increased 0.8% from a month earlier to a 3.82 million annualized rate, according to the National Association of Realtors, and ahead of estimates of 3.78 million units.

We made the mistake of referring to mortgage rates as being “sharply sideways” yesterday–a description that’s only dusted off for the most uneventful of days.  Joke’s on us!  Today’s sideways-ness was possibly even sharper!  That said, it was a bit more interesting by the time we consider what went on behind the scenes. Long story short, the bond market (which determines day to day rate movement) was paradoxically strong today.  Bonds usually improve when economic data is weak and when Treasury demand is strong.  Today’s data was stronger than expected and the scheduled auction of 20yr US Treasuries was lackluster. Despite those seemingly negative cues, bonds improved and mortgage rates were able to remain as low as they were yesterday.  For the average lender, this is right in line with the best levels since May, 2023.  Tomorrow morning brings the week’s heftiest slate of potentially significant economic data (the stuff that can the bonds that, in turn, can move the rates).  That said, it also brings us one day closer to a very slow time of year for bond trading.  That means we could continue to see more paradoxical movement with rates not necessarily following the advice of the econ data.  That’s a lot of uncertainty!  One thing we actually do know is that we won’t have obvious, actionable inspiration from scheduled data until the first week of January.  Mortgage rate volatility won’t disappear, but it should remain relatively more muted between now and then.

Surprisingly Strong Day Leaves Yields at Fresh Lows

Nothing good happened for the bond market today–at least not in terms of economic data coming in weaker or Fed speakers saying new and supportive things.  In fact, the economic data was biased toward strength–especially if you ask Consumer Confidence at 110.7 vs 101 previously.  Top that off with a modest miss in the 20yr bond auction and there was really and truly no great reason for bonds to improve during domestic hours.  Nonetheless, the U.S.-only trading hours saw the best gains of the day as 10s rallied under 3.85% in the afternoon.  That leaves us grasping at the same straws we set out for ourselves last week: i.e. an inconsistent year-end trading environment in which lighter volume/liquidity make for bigger-than-normal moves in response to compulsory year-end trading needs.  The ball happened to bounce our way today.  It could have gone either way.

Econ Data / Events

Existing Home Sales

3.82m vs 3.77m f’cast, 3.79m prev

Consumer Confidence

110.7 vs 104 f’cast, 101 prev

Market Movement Recap

10:05 AM Steadily stronger throughout the overnight session. Modest bounce at 9am.  MBS still up 2 ticks (.06) and 10yr down 3.3bps at 3.898

10:32 AM More modest losses after stronger consumer confidence.  10yr still down 2.6bps at 3.905, but at highs of the day.  MBS still up 3 ticks (.09) but at lows of the day.

04:14 PM modest weakness giving way to moderate strength in the PM hours despite weaker Treasury auction.  10yr down 7.4bps at 3.857.  MBS up 5 ticks (.16).

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Bonds were stronger in the overnight session with an infusion of buying demand following weaker UK inflation data.  This brought 10yr yields into U.S. hours at fresh lows of 3.87+.  There was some push-back from domestic traders at 9am and a bit more after the stronger Consumer Confidence data at 10am, but not nearly enough to derail the rally.  Even if the rally is ultimately erased, yields could rise several bps into negative territory without sending any other message than “low and flat, near the best levels in months.” 

The Thanksgiving holiday was followed by two strong weeks for mortgage applications, especially for refinancing, as mortgage rates fell. This past week, however, the lowest rates in six months failed to stir much interest among borrowers.  The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of mortgage loan application volume, eased back by 1.5 percent on a seasonally adjusted basis and was down 3.0 percent before adjustment. Refinancing, which had increased by an aggregate of 33 percent over the previous two weeks, seemed to run out of steam. The Refinance Index declined 2.0 percent from the previous week, remaining 18 percent higher than the same week in 2022. The refinance share of mortgage activity increased to 39.7 percent of total applications from 39.2 percent the previous week. [refiappschart] The seasonally adjusted Purchase Index ticked down 1.0 percent and was 4.0 percent lower on an unadjusted basis. It was 18 percent lower than during the same week in 2022. [purchaseappschart] “With the positive news about the drop in inflation, and the FOMC (Federal Open Market Committee)  projections proclaiming a pivot towards rate cuts, the 30-year fixed mortgage rate reached its lowest level since June 2023, declining to 6.83 percent,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “At least as of last week, borrowers’ response to this rate move was rather tepid.  VA refinance applications jumped 18 percent for the week, but otherwise, both refinance and purchase applications showed small declines.”