The Fed’s higher for longer statements have pushed up the 10-year Treasury in recent weeks to levels last seen in 2007 and that is affecting pricing.

Contract closings decreased 2% from a month earlier to a 3.96 million annualized pace, National Association of Realtors data showed Thursday.

Sales fell below the $4 million mark in September, marking the slowest month for existing home sales since October 2010. The National Association of Realtors® (NAR) said sales of preowned single-family houses, townhouses, condos, and cooperative apartments sold at a seasonally adjusted annual rate of 3.96 million units last month, a 2.0 percent decline from the rate of 4.04 million posted in August. Home sales in September 2022 were at an annual rate of 4.68 million units. While the results were dismal, they were still slightly better than expected. Analysts for Econoday had a consensus estimate of 3.90 million units. Single-family home sales slipped to a seasonally adjusted annual rate of 3.53 million in September, down 1.9 percent from 3.6 million in August and 15.8 percent lower year-over-year.  Condominium and co-op sales were recorded at a seasonally adjusted annual rate of 430,000 units in September, down 2.3 percent and 12.2 percent from the two earlier periods. “As has been the case throughout this year, limited inventory and low housing affordability continue to hamper home sales,” said NAR Chief Economist Lawrence Yun. “The Federal Reserve simply cannot keep raising interest rates in light of softening inflation and weakening job gains.” Sales may be falling, but home prices increased for the third consecutive month. September sales were at a median price of $394,300, an increase of 2.8 percent from the September 2022 median of $383,500. The median single-family home price was $399,200, an annual increase of 2.5 percent. Condo prices jumped 6.8 percent to a median of $353,800.

There have been some more abrupt rate spikes in the recent past–days where the average mortgage rate has risen by more than an eighth of a percent (the standard increment separating one mortgage rate from the next).  Today was not one of those days. But while rates were only modestly higher versus yesterday, they achieved the unfortunate distinction that’s been handed out in the past month more than in the past several decades combined.  Specifically, today’s rates represent a new multi-decade high (23 years to be precise).   That achievement no longer has the shock value it once did.  It’s just a thing that gives us another sentence to write.  So let’s move on. Today’s rate spike happened in spite of Fed Chair Powell confirming that the Fed is likely done hiking the Fed Funds Rate.  To be fair, the Fed’s rate doesn’t dictate mortgage rates, nor does it even correlate very well much of the time.  This is especially true right now when short term rates are higher than long term rates (i.e. inverted yield curve). As the curve un-inverts (which we’d expect to see based on the Fed’s stance), it can happen in two ways: long term rates can rise more quickly than short term rates, or short term rates can fall more quickly than long term rates.  Actually the 3rd and least common example are the days where short term rates fall and long term rates rise.  That’s what we had today. Mortgages tend to be caught in the middle when it comes to the benchmarks for “short and long” in the bond market (2yr and 10yr Treasuries, specifically).  We didn’t lose as much ground as 10s, but we didn’t make any gains as seen in 2s.   

This morning is off to what could potentially be described as a “weird” start.  If it’s not weird, it’s at least interesting.  Why weird?  Bonds rallied after jobless claims came in at 198k versus a forecast of 212k and a previous reading of 211k.  Anything near or under 200k speaks to a very tight labor market.  Moreover, this is the claims data that aligns with survey week for the next NFP number.  In other words, bonds should have sold off.  One of the few ways to justify the rally would be to observe 10yr yields hitting 4.983% about half an hour before the data.  There has certainly been increased chatter about 5% 10yr yields representing a buying opportunity and it’s possible some of that buying was underway as the claims data came out.

Unlike lenders who are dealing with 8 percent on rates sheets, sports fans and sports bars are reveling: NBA, MLB, NFL, NHL, all at the same time… And Philadelphia is in the thick of it. A lot of halftimes. Is our industry “down 20-0 at halftime?” Here are the thoughts of Fairway CEO Steve Jacobson on not giving up, having shots taken at you, and using the tools lenders and LOs have to keep helping their clients, including technology. The word “technology” was mentioned about 4,698 times this week at the conference in Philly. If you’re wondering what a great use for AI is, it is summed up in this two-panel cartoon. Gallus Insights CEO Augie Del Rio summed it up nicely. “A machine will always beat a person. A person with a machine will always beat a machine.” But one of the messages this week was how lenders are shedding, yes shedding, expensive unused technology in an effort to cut costs. It is easier said than done, but IT staff are hard at work evaluating usage and expenses across the industry. (Today’s podcast can be found here: Sponsored by nCino, maker of the nCino Mortgage Suite, built for the modern mortgage lender. The nCino Mortgage Suite unites the people, systems, and stages of the mortgage process. Hear an interview with Candor’s Tom Booker on AI developments in the underwriting space.) Lender and Broker Software, Products, and Services The Optimal Blue team can’t wait to head to New York Nov. 9 – 10 for the only event dedicated 100% to mortgage servicing rights. Don’t miss an opportunity to catch industry experts Mike Vough and Vimi Vasudeva as they speak on their passions at IMN’s 9th Annual Residential Mortgage Servicing Rights Forum. On Nov. 9, Mike’s session will explore the economics of retain vs. release decisioning in today’s market. Then on Nov. 10, Vimi will cover “Valuation, Modeling & Risk Inputs: Volatility, Liquidity, Credit, Market, Duration & Correlation.” Both sessions will offer valuable insight to support your business strategies. And as always, experts from Optimal Blue will be ready to answer questions and discuss your goals in the expo hall.

The bank suffered its third breach in three years, this time by virtue of a vulnerability in Progress Software’s file-transfer system. But Flagstar is only one of many such victims.

American Bank of Oklahoma agreed to a consent order in August to settle allegations from the Department of Justice over redlining. However, the institution strenuously objected to references to the Tulsa Race Massacre in the agreement and asked that the language be stricken.

The unit of the German software firm will offer its cloud-based lending platform to a range of financial businesses, partnering with Blue Sage and Ranieri Solutions for origination and servicing capabilities.

How far have these programs come in reaching their goals and how much further do they need to go?