“Lower volatility and more sideways momentum” have been the themes as we’ve moved away from last week’s more consequential economic data.  The underlying bond market has been microscopically stronger since then and that’s resulted in microscopically lower rates.   But for all intents and purposes, rates have simply been flat at 2 month lows for about a week and today did very little to change that.  At the risk of reiterating the same message again, there aren’t any obvious reasons for that to change until we get some more important economic data–something that won’t unequivocally be the case until the first week of December. The bond market and mortgage lenders will be closed for the Thanksgiving holiday tomorrow.  The bond market is technically open for a half day on Friday, but not every mortgage lender will be publishing rate sheets.  Those who do may employ different strategies than normal, so you’re essentially waiting for next Monday before truly knowing how mortgage rates are evolving in the short term. Again, we’re not expecting a great deal of “evolution,” but anything’s possible.  The safest conclusion is to assume there’s an infinitely greater risk/chance of big movement during the following week–especially after the jobs report on Friday, Dec 8th.

Thinking of purchasing a house for a disabled adult child or parent? Are you unable to qualify for a mortgage due to a disability? While this program no longer has a brandable name, it’s the perfect fit for specific borrowers. Let’s set the stage with my scenario: Currently renting, my prospective client wants nothing more than to be a homeowner. Disabled from a young age, the sense of independence that comes with homeownership has become rare air. The problem? Never enough income to qualify. A couple of sentences in Conventional guidelines make a world a difference for prospective homebuyers with disabilities: Fannie Mae will consider the residence to be a principal residence even though the borrower will not be occupying :

Parents or legal guardian wanting to provide housing for their handicapped or disabled adult child

If the child is unable to work or does not have sufficient income to qualify for a mortgage on their own, the parent or legal guardian is considered the owner/occupant.

Notice how they use the term “adult child?” The disabled occupant can’t be a minor. In that same vein, determining legal agreement competency must be addressed. When a party to the purchase contract is mentally disabled in a manner that disqualifies their competency in entering legal agreements, he/she is ineligible to sign purchase and mortgage documents.

Inconsequentially Weaker After Data; We’ll Be Back on Monday

While Friday will technically be a half day for the bond market much like other things technically betray their true nature.  It’s a courtesy day for market functioning.  That left today as the last day of the week.  Bonds sold off modestly after the morning econ data, but due to the “end-of-week” trading going on, some of that could also be due to position-squaring among longs (i.e. traders who had been betting on lower rates booking profits and getting neutral until the market comes back to life no earlier than next week).   NOTE: there will be no custom alerts or commentary on Friday. The video in today’s recap provides a refresher on setting up custom alerts if you’re working with one of the few lenders that will be actively managing their rate sheets on the half day.

Econ Data / Events

Consumer Sentiment

61.3 vs 60.5 f’cast, 63.8 prev

1yr inflation expectations

4.5 vs 4.4 f’cast/prev

5yr inflation expectations 

3.2 vs 3.2 f’cast/prev

Jobless Claims

209k vs 225k f’cast, 233k prev

Continued Claims

1840k vs 1862k prev

Durable Goods

-5.4 vs -3.1 f’cast, 4.0 prev

Core Durable Goods

-0.1 vs +0.1 f’cast, -0.2 prev

Market Movement Recap

10:27 AM Slightly stronger overnight, but pushing back after data.  MBS down an eighth.  10yr up 2.6bps at 4.424.

11:43 AM MBS down 6 ticks (.19) and 10yr up 2.2bps at 4.420

03:26 PM Flat after the post-data weakness.  MBS down 5 ticks (.16) and 10yr yields up 2bps at 4.418

Up until yesterday, we would have placed the lower boundary of the prevailing range somewhere between the 4.40% lows from last Friday and the 4.43% pivot point that marked most of the other recent bounces.  Yesterday stretched the boundary down into the high 4.3’s–not an unforgiveable offense given Thanksgiving week’s propensity for light trading to have a bigger-than-normal impact.  Now today, all it took was a few pieces of modestly unfriendly economic data and bonds are right back up to 4.43.  Bottom line: Thanksgiving week continues to deliver on all of its most boring promises.

With bonds holding sideways to slightly weaker today and with no additional data on tap, the week is effectively over.  Tomorrow is, of course, fully closed for Thanksgiving, and while Friday is technically open for a half day, it’s not a day that factors into anyone’s assessment of how the bond market is trading.  At best, we can hope for a bit of participation next week, but it’s really the week after where things stand any real chance to get interesting again.

“I threw my phone from the roof, and it broke. I guess airplane mode wasn’t working.” Plenty of folks will be traveling soon. Here’s some trivia for tomorrow at the dinner table! (One wonders if residential lending is heading in this direction) … But there are only 12 passenger airlines in the United States. That’s up from 10 just a few years ago but down from about 80 airlines at the peak industry in the 1980s due to a series of bankruptcies and mergers. Four of those companies (Delta, United, American, and Southwest) control 80 percent of the market, with the remaining 20 percent being low-budget airlines that are increasingly struggling. The average airline fare has declined 13 percent over the past year, and that’s been causing issues for the companies that specialize in lower fares, as many of their customers are now seeing the big guys as more accessible than before. (Today’s podcast can be found here, sponsored by Candor. Candor’s patented automated underwriting decision engine, CogniTech, is a state-of-the-art, 100 percent machine platform that can handle infinite loan scenarios. Hear an interview with the STRATMOR Group’s Garth Graham on M&A activity in 2023 and trends in the space heading into 2024.) Lender and Broker Software, Products, and Services With increased regulatory focus on property-valuation bias, lenders need robust risk-management processes in place. The recently released interagency proposals on AVM quality control and ROV-process guidance are designed to prevent valuation bias and help ensure industry stakeholders follow fair-lending practices. Watch our complimentary on-demand webinar to learn how you can prepare, and implement the tools needed to support the proposed AVM standards and ROV guidance.* Our experts discuss how to identify potential bias in valuations, ways to mitigate bias risk, how to monitor AVM and appraisal compliance with fair-lending requirements, and more. Watch this timely and important webinar here. *Check with your compliance or legal department for information on complying with applicable law.

Some proposed changes to uniform mortgage-backed securities, apartment loans and derivatives will be made while one involving credit reports and scores was pulled.

The loan pool consists of approximately 34,000 single-family mortgages with unpaid principal balances near $11.5 billion.

A complicating factor is that many consumers do not understand how their real estate agent – on either the buy- or sell-side – actually gets paid, Clever Real Estate found.

The former Trump-appointed Federal Housing Finance Agency head offers insights on the road ahead for mortgage lenders and residential real estate at large.

Contract closings decreased 4.1% from a month earlier to a 3.79 million annualized pace, still the lowest since 2010, National Association of Realtors data showed Tuesday.