Here in the Milwaukee area (yes, the autumn colors are stellar), I attended a Newrez joint venture event and one of the conversation topics (besides lenders either saying “no mas” and exiting or being purchased, more below, or NAR’s legal events, more below) is the changing landscape of down payments and down payment assistance programs. STRATMOR’s current blog is titled, “Mind the Down Payment”. Despite high mortgage rates and low buyer demand, home prices are still at record highs in many parts of the country leading to higher down payments. LendingTree analyzed data from more than 580,000 users of our platform who lived in one of the nation’s 50 largest metropolitan areas. A down payment on a home across the nation’s 50 largest metros averages $84,499. While down payments vary significantly by location, no metro in this year’s study has an average of less than $47,900. California is home to the three metros where down payments are highest, Buffalo, N.Y., Oklahoma City, and Virginia Beach, VA, have the lowest. (Today’s podcast can be found here, sponsored by Visio Lending and its top notch broker program. Visio is the nation’s premier lender for buy and hold investors with over 2.5 billion closed loans for single-family rental properties, including vacation rentals. Listen to interview with Visio Lending’s Jeff Ball on trends in DSCR Loans.) Lender and Broker Software, Products, and Services They say money doesn’t grow on trees. But that hasn’t deterred the 48,000 people who have hammered coins into the Ingleton Coin Tree over the centuries in the hopes of receiving good fortune and wealth in return. Mortgage lenders searching for prosperity can save themselves a transatlantic flight and register instead for the latest installment in TrustEngine’s Path to Profitability webinar series. Ben Miller, EVP of nCino’s U.S. Mortgage Suite, will join Churchill Mortgage’s Matt Clarke and TrustEngine’s Dave Savage to share consultative selling and technology strategies used by today’s 9-figure producers to create modern, tailored experiences that resonate with clients. It’s free and it’s happening today at 2 pm ET. Save your spot here.

Interest rates rose again last week, as did the share of borrowers seeking a little price relief by applying for adjustable-rate mortgages (ARMs). While applications for refinancing rose slightly, overall volume declined again. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of mortgage loan application volume, declined by 1.0 percent on both a seasonally adjusted and unadjusted basis during the week ended October 20. The Refinance Index increased 2.0 percent from the previous week and was 8.0 percent lower than the same week one year ago. The refinance share of mortgage activity increased to 31.4 percent of total applications from 30.5 percent a week earlier. Both adjusted and unadjusted Purchase Indices were 2.0 percent lower than the prior week Purchase applications were down 22 percent on an annual basis.   [refiappschart] [purchaseappschart] “Ten-year Treasury yields climbed higher last week, as global investors remained concerned about the prospect for higher-for-longer rates and burgeoning fiscal deficits. Mortgage rates followed Treasuries higher, with the 30-year fixed mortgage rate jumping 20 basis points to 7.9 percent – the highest since 2000. Rates have now risen seven consecutive weeks at a cumulative amount of 69 basis points,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Mortgage activity continued to stall, with applications dipping to the slowest weekly pace since 1995. These higher mortgage rates are keeping prospective homebuyers out of the market and continue to suppress refinance activity. The ARM share of applications inched up to 9.5 percent, its highest since November 2022. ”  

Until now, National MI and Essent did not have direct ties with the legacy platform, although they are already on the newer enterprise loan origination system.

The recent jump is the biggest increase since the run up in the early 1980s, when Paul Volcker’s efforts to slay inflation pushed the 10-year yield to nearly 16%.

The company’s builder and mortgage banking segments both ended up in the black, as sales for new constructions outperform the existing-home market.

Mortgage borrowers alleged in U.S. District Court that the servicer applied funds in the wrong order and charged unnecessary interest.

After years of discussion among regulators, the Federal Reserve Board has approved changes to its CRA rules that will base compliance exams on where lending occurs rather than branch locations. The updates — set to take effect in January 2026 — also emphasize lending in lower-income areas as well as community development loans and investments.

Mortgage rates didn’t move much today, but the movement was in a friendly direction at least.  The caveat is that this pertains to the average lender.  When a move is modest in size, that means many borrowers at many lenders won’t even see a detectable difference from yesterday and some borrowers may even see slightly higher rates. But let’s not get caught up in the day to day minutia.  Instead, let’s focus on the important observations and questions.  For instance, this is the first time in 2 months that we’ve seen 3 consecutive days and one of only 3 examples in the past 5 months. Does that mean something is changing or that the relentless surge toward 23-year highs is finally abating? It’s too soon to say, unfortunately–possibly far too soon.  The bond market is consolidating after 10yr Treasury yields hit the important 5% psychological milestone.  MBS (the mortgage-backed securities that dictate mortgage rates) almost always take day-to-day directional cues from Treasuries.  As such, mortgage rates have leveled off in similar fashion (just replace the 5 with an 8). We won’t truly be able to confirm that a corner has been turned in the big picture until we have multiple economic reports suggesting that inflation is unequivocally headed back to 2% and the broader economy is growing at a much slower pace.  

Encouraged, But Not Convinced

It is certainly encouraging to see a modestly positive day for the bond market in the wake of a decent 2-day winning streak and despite a modestly stronger PMI number this morning.  To see the 3 day move in the wake of 10yr yields hitting 5.0%+ for the first time since 2007 is perhaps slightly less encouraging.  Either way, the market is at least “pausing for reflection” here.  In other words, there’s no immediate plan to stampede up and over 5.0%, but neither do we have confirmation that rates have turned some epic corner in the bigger picture.  At the risk of falling back on the same old thesis: it’s data dependent.

Econ Data / Events

S&P Global Services PMI

50.9 vs 49.8 f’cast, 50.1 prev

S&P Global Manuf. PMI

50.0 vs 49.5 f’cast, 49.8 prev

Market Movement Recap

09:42 AM Fairly flat so far after lower-volatility overnight session.  MBS roughly unchanged.  10yr up less than 1bp at 4.857

11:03 AM Stabilizing after a bit of weakness.  MBS roughly unchanged.  10yr up 2.6bps at 4.874.

02:33 PM Slightly stronger in the PM hours.  MBS up 2 ticks (.06) and 10yr yields down about half a bp at 4.844

03:57 PM Best levels of the day by a mall margin.  MBS up 5 ticks (.16).  10yr yield down 2.7bps at 4.821.

When the big corner is eventually turned for rates, it will have to start somewhere, so let’s talk about whether the current bond rally could be the first few steps in a longer journey.  After hitting new long term highs last Thursday, bonds have rallied quite well over the past two days.  That’s not really uncommon.  In fact, the friendly bounce is no bigger than other recent examples of token corrections in the wake of hitting long term highs.  We’re also not exactly stampeding through the next technical floor today.  

Bottom line, possible things are still possible, but they also still depend on data to drive and confirm the next phase.  All we know for now is that the bond market is doing logical things at a big, psychological level.  Perhaps logical isn’t quite the right word.  Let’s say that bonds are “playing it safe” by adhering to a common technical pattern of revisiting the last big, broken ceiling around 4.83 and treating it as a floor for now.  A neutral approach from here would suggest bonds need softer data to break much below 4.83.  If it happens without data, it would reveal some excess bullishness.