Kenon Chen, executive vice president, strategy and growth, at Clear Capital, discusses data sourcing that can best serve the mortgage and underwriting process and how it can be done in an ethical way to achieve maximum benefit.

If you count the Friday after Thanksgiving as a business day, mortgage rates had fallen for 6 straight days as of yesterday afternoon.  Moreover, they’d reached the lowest levels in 3 months and had put an impressive amount of distance between themselves and the highs seen just over a month ago. Ironically, yesterday’s analysis expressed some measure of bewilderment at just how much better rates were versus the previous day.  Now today, we see that all good things–especially those that look a little TOO good–come to an end. This isn’t necessarily a bad thing.  When rate rallies continue unabated, the certainty and swiftness of the eventual rebound only increase.  By undergoing a moderate rebound in a measured, logical way, rates have made it easier for themselves to remain in the current range without excess volatility. That doesn’t mean volatility is out of the question, but it’s more likely to be seen in response to the big ticket economic data that typically inspires bigger swings in rates.  We won’t get most of that big ticket data until next week, but there is a chance that tomorrow morning’s ISM Manufacturing index will spark a reaction if it’s much higher or lower than expected. As is always the case, there’s no way to know if the data will be good or bad for rates ahead of time.  All we know is that the rate market is incredibly interested in the upcoming data as an indication of whether rates have officially turned a corner in the big picture.  While that’s exciting (or scary), keep in mind that it would take several months of cohesive data to do the trick.

The National Association of Realtors® (NAR) said its Pending Home Sale Index (PHSI) established a record low in October. The Index, a forward-looking indicator of contracts signed to purchase single-family homes, townhomes, condominiums, and cooperative apartments, dropped 1.5 percent to 71.4 in October, the lowest number since the index was originated in 2001 . The Index has now fallen 8.5 percent in the last year.   [pendinghomesdata] Lawrence Yun, NAR’s chief economist said, “During October, mortgage rates were at their highest, and contract signings for existing homes were at their lowest in more than 20 years. Recent weeks’ successive declines in mortgage rates will help qualify more home buyers, but limited housing inventory is significantly preventing housing demand from fully being satisfied. Multiple offers, of course, yield only one winner, with the rest left to continue their search.” The only region in the nation to see improvement in October was the Northeast. The PHSI for that region rose 2.7 percent to 64.8. This was still a 6.5 percent year-over-year retraction. Contract signings were down 0.4 percent in the Midwest compared to September and declined 10.3 percent from the prior October. In the South , the PHSI was 85.6, a 1.9 percent and 7.1 percent decrease from the two earlier periods. The West’s index fell 6.0 percent 51.8 and was 10.8 percent below its level a year earlier.

It would have been a lot to ask for bonds to continue rallying without any major justification after hitting 4.25% yesterday and after 50bp rally over the past 4 weeks.  That tall order grew even taller after the AM econ data, Fed comments, and OPEC news.  Each had a hand in pushing yields higher in the AM hours. 
The 8:30am reaction is the least interesting of the 3.  It looks more like a market that was holding out the possibility of weaker data and then simply didn’t get it.  The Fed comments and OPEC headlines were the morning’s biggest deal. Interestingly enough, no one at the Fed is saying anything new, but some traders are surprised there hasn’t been a more detectable shift in tone (i.e. some are still
The nice thing about this particular sell-off is that it is wholly inconsequential in the bigger picture.  In fact, it’s setting up to be classified as a modest token correction after a big rally.  Bigger revelations and market movement are more of a “next week” kind of thing.
 

Home schooling is the goodest thing I ever did for my two kids. Hopefully, they both learned that an inverted yield curve doesn’t automatically create, or lead to, a recession. As we approach 2024, short term rates have been higher than long term rates since 2022, and when you think of the last 10 recessions eight of the last 10 were preceded by an inverted yield curve. But now the “experts” are saying that this yield curve inversion is due to artificial reasons, namely the U.S. Federal Reserve’s actions that shifted rates, rather than more natural factors. Time will tell, and no one can eliminate business cycles, so we may have a recession (and with it, lower rates) at some point. But for now, “The U.S. economy is becoming increasingly recession resistant. State, local, and federal government spending as a percentage of GDP has risen from 29 percent in 1962 to 35 percent today. Healthcare spending has risen from 5 percent of GDP in 1962 to 18 percent in 2021. Collectively they have risen from 34 percent of GDP to 53 percent and most critically, both sectors are not particularly interest-rate sensitive.” So spoketh Dr. Elliot Eisenberg. (Today’s podcast can be found here, and this week’s is sponsored by MCT. MCT’s technology and know-how continues to revolutionize how mortgage assets are priced, locked, protected, valued, and exchanged, offering clients the tools to thrive under any market condition. Hear an interview with Lender Price’s Dustin McClelland on how lenders can upgrade or enhance their pricing technology.)

Under the proposal, the maximum allowable rehabilitation costs for the agency’s limited program will rise to at least $50,000 to account for increases in repair expenses.

While House Republicans and Consumer Financial Protection Bureau Director Rohit Chopra normally clash, Republicans offered unusual praise for Chopra’s efforts around data privacy for consumers.

Net income at banks fell 4.6% year over year in the third quarter, though it remained above pre-pandemic levels, according to the latest Quarterly Banking Profile. FDIC Chairman Gruenberg cautioned about deteriorating commercial real estate loans and unrealized losses on securities in a high interest rate enviroment.

While ransomware group Alphv/Blackcat claims to have orchestrated the incident, title insurance company Fidelity National Financial has not yet stated whether confidential data was compromised.

Morais, who leads the auto lender’s consumer and commercial banking divisions, is preparing to leave as Ally Financial conducts a search for its next chief executive officer. She had been seen as a potential candidate to replace outgoing CEO Jeffrey Brown.