Anywhere Real Estate’s agreeing to decouple seller and buyer agent commissions might lead to revolutionary revisions to the real estate sales process — or little to no change.

While the group’s bid remains at $12.76 a share, it has beefed up its equity commitments, eliminated risks associated with debt financing and increased the damages it would pay if it fails to consummate the transaction, people familiar with the matter said.

Mortgage rates haven’t had a great week so far.  Monday’s bank holiday meant that mortgage lenders had to account for an extra day of movement in the bond market (rates are based on bonds).  That movement happened to be toward higher rates.  From there, both Tuesday and Wednesday were bad days for a variety of reasons.  One of the reasons was familiar: economic data was strong on Wednesday and there was a clear correlation between the release of that data and the bond market weakness. The other reason is more esoteric: the corporate bond market.  This refers to bonds issued by corporations to finance operations as opposed to US Treasuries (issued by the government) or mortgage-backed securities (MBS) issued by mortgage lenders to make room on their balance sheets for new business. There’s a certain degree of supplementary competition among bonds.  In other words, if more corporate bonds are available, investors may buy those instead of MBS/Treasuries, thus putting upward pressure on mortgage rates.  There are also some behind-the-scenes considerations that are even more esoteric but suffice it to say, they cause short term volatility in the rate sector, even though a portion of that volatility is often reversed in a matter of days. All that to say: the extra oomph behind the upward rate momentum at the start of the week is at least partly attributable to the glut of corporate bonds.  There were far fewer today and the bond market seemed to breathe a little sigh of relief.  Granted, that didn’t amount to much in the bigger picture, but it at least helped the average mortgage lender avoid getting too close to the decades-long highs seen at the end of August. [thirtyyearmortgagerates]

Stronger Bonds Despite Stronger Data

In this very “data dependent” environment, it was no surprise to see bonds initially lose some ground after this morning’s economic data came out stronger than expected (jobless claims at 216k vs 234k forecasts, specifically).  But the selling wasn’t too severe and it didn’t last long.  More importantly, bonds went on to improve steadily throughout the day.  What gives?!  In this case, the determining factor may be as simple as a deluge of corporate bond issuance artificially increasing bond yields over the first two trading days of the week, thus leaving traders in a better position to blow off some steam and adhere to the supportive ceiling implied by the most recent highs in mid-to-late August.

Econ Data / Events

Jobless Claims

216k vs 234k, 229k prev

Labor Costs

2.2% vs 1.9% f’cast, 3.3% prev

Market Movement Recap

09:53 AM Initially weaker after claims data, but back in positive territory now.  MBS up 2 ticks (0.06) and 10s down 1.2bps at 4.284.

11:49 AM Modest additional strength.  MBS up 6 ticks (.19).  10yr down 2 bps at 4.276.

02:41 PM Fairly sideways since late morning rally.  MBS up 6 ticks still (.19) and 10yr yield now down 3.2bps at 4.264.

03:33 PM Best levels of the day now with MBS up a quarter point.  10yr near lows, down 3bps at 4.266.

Bonds have been waiting in line for a shift in the economic data and the rally that might result, but the ill-tempered econ data continues the refrain: “no rally for you!” Playing the role of every Seinfeld fan’s favorite soup serving fascist is the weekly jobless claims data.  Simply put, it continues to come in at levels that are unimaginable in the context of a labor market that is anything other than tight. The only caveat is that seasonal adjustment factors have been an ongoing guessing game.  That may or may not be an actual consideration for today.  Bonds sold off initially, but have bounced back.  The bigger factor is likely the ebbs and flows in corporate bond issuance.

To put the corporate bond issuance thing in perspective, Labor Day weeks are always big.  2021’s Labor Day week was the biggest on record with over $63bln in new issuance on those 4 days.  As of yesterday afternoon, 2023 is in second place with $54 bln (hat tip to BMO for the stats).
Record or not, $54bln in 2 days is outrageously big and something that would unequivocally put a ton of upward pressure on bonds.  The nice thing about corporate issuance is that there can be bond buying on the other end of the issuance process as traders buy back the Treasuries that were previously sold to effectively lock in rates of return ahead of the issuance (more here).

“My mother used to say that the way to a man’s heart is through his stomach. Wonderful woman, lousy surgeon.” There is some great food in various parts of the nation, and today I will head from Dallas, TX to Jackson, MS, for the Mississippi MBA annual conference. Dallas is certainly home to its share of real estate owned by people outside of the country. But it turns out that annual foreign investment in U.S. existing-home sales declined 9.6 percent to $53.3 billion over the past year and the number of existing homes bought by international buyers declined to 84.6k, the fewest since 2009 and down 14.2 percent from the prior year. The average ($639k) and median ($396k) purchase prices for international buyers were the highest ever recorded by NAR. For those who like lists, China, Mexico, Canada, India, and Colombia were the top five countries of origin by number of U.S. existing homes purchased. The top U.S. destinations for foreign buyers were Florida (23 percent), California and Texas (12 percent each), then at 4 percent each North Carolina, Arizona, and Illinois. (Today’s podcast can be found here and this week’s is sponsored by LoanCare, a Fidelity National Financial (NYSE: FNF) division and award-winning developer of the most sophisticated mortgage servicing portfolio management tool, LoanCare Analytics, built to support MSR investors with a focus on customer engagement, liquidity, and credit risk. Hear an interview with Polunsky Beitel Green’s Marty Green on market participants finally wrapping their heads around the Fed’s hawkishness.)

The long climb in mortgage rates has also kept an additional $200 billion in equity out of the hands of borrowers, and the economy at-large, the firm said.

As the Latino population in the U.S. expands, so does the business case for banks and credit unions that want to tailor services for this audience.

Purchase-loan activity dropped again to its most subdued level in close to three decades, while refinances saw their smallest numbers in eight months, according to the Mortgage Bankers Association.

Philip Jefferson was the Biden administration’s pick for the Fed’s number two position following the departure of Lael Brainard earlier this year. Two more Fed nominees are expected to get confirmation votes this week.