The Hicksville, New York, company says its deposit base is stable and poised for growth four months after its acquisition of the failed Signature Bank, some of whose depositors fled to larger banks. Private bankers — including new hires from another failed bank, First Republic — are trying to win back lost deposits.

The National Association of Realtors’ index of contract signings to purchase previously owned homes advanced 0.3% last month to 76.8, data out Thursday showed.

There’s divergence of opinions between one more rate hike this cycle and no further actions.

The Fed hiked its policy rate yesterday and now today, mortgage rates jumped quite a bit higher.  While there are already headlines drawing a connection between these two events, they are actually unrelated.  As we discussed yesterday, the Fed’s rate hike was already baked into yesterday’s rate levels.  Mortgage rates actually moved lower in the afternoon! Today was a new day, and it brought another chance for rates to exhibit their “data dependent” nature.  Fed Chair Powell reminded the market that rates would depend on data, but that dependency doesn’t carry a directional connotation in and of itself.  In other words, it didn’t mean rates were destined to rise today.  They just as easily could have fallen if the data had been weaker than expected. But the data wasn’t weaker, and rates didn’t fall.  All 4 of this morning’s scheduled economic reports came out stronger than expected.  In general, stronger econ data puts upward pressure on rates.  That’s especially true in recent weeks/months and today was no exception.  The average mortgage lender was able to move back below 7% yesterday, but today’s jump was more than enough to erase that progress.  Lenders are now closer to 7.125%–a number very much at odds with the 6.81% reported this morning in Freddie Mac’s weekly rate survey. As always, keep in mind that Freddie’s weekly rate number is a lagging indicator.  It presents a 5 day average through Wednesday and doesn’t report it until Thursday. That’s no big deal with rates are generally flat, but it’s a very big deal when there’s a big swing in rates on Thursday itself (just like today!).  

Pending home sales pulled out of a three-month spiral in June but with only a fractional increase from May. The National Association of Realtors® (NAR) said its Pending Home Sales Index (PHSI) ticked up 0.3 percent thanks to increased activity in the Northeast and Midwest. When it posted its last increase in February, the PHSI stood at 83.2. In June the level was 76.8. The index has fallen 15.6 percent since May 2022. The PHSI, a leading indicator for the housing sector, is based on contracts signed to purchase existing homes. Those sales are typically finalized within one or two months.  The PHSI was benchmarked at 100 in 2001, a number equal to the average level of contract activity during that year. The incremental increase led NAR Chief Economist Lawrence Yun to strike a positive note. “The recovery has not taken place, but the housing recession is over,” he said. “The presence of multiple offers implies that housing demand is not being satisfied due to lack of supply. Homebuilders are ramping up production and hiring workers.” Yun expects the 30-year fixed-rate mortgage to average 6.5 percent this year and 6.0 percent in 2024. He added, “With consumer price inflation coming close to the Federal Reserve’s desired conditions, mortgage rates look to have topped out. Given the ongoing job additions, any meaningful decline in mortgage rates could lead to a rush of buyers later in the year and into the next.” That expectation is reflected in a forecast of a 12.9 percent decline in existing home sales in 2023, to 4.38 million, but a 15.5 percent rebound to 5.06 million units next year. Compared to last year, national median existing-home prices will remain steady – declining 0.4 percent, to $384,900, before rebounding by 2.6 percent, to $395,000 in 2024. The West – the country’s most expensive region – will see reduced prices while the more affordable Midwest region is likely to see a small, positive increase. Housing starts will drop to 1.47 million units (-5.3 percent) from 2022 to 2023, before increasing 5.4 percent to 1.55 million in 2024.

Yesterday’s closing headline and most condensed recap of Powell’s press conference was simply: “data dependence continues.”  Indeed it does!  This morning’s economic data came out resoundingly stronger with all four reports beating forecasts–rather significantly in at least 2 cases.  A slightly dovish read on the European Central Bank announcement helped bonds hold their ground with minimal losses earlier in the morning, but after Lagarde’s press conference ended, the selling snowball is rolling.

We also discussed the fact that the frontier for the rate hike outlook is far into the future these days.  The market doesn’t expect much more upward pressure in terms of Fed rate hikes in the coming months.  Instead, the adjustments to the outlook have been taking place in the form of lower expectations for rate cuts in 2024.  Yesterday’s press conference helped restore some of that rate cut expectation with the March Fed meeting showing rates a quarter point lower than the level created by yesterday’s hike.  Now this morning, the econ data has fully reversed that expectation. 

“I’m trying to organize a hide and seek tournament, but good players are really hard to find.” Good LOs (trustworthy, loyal, helpful, friendly, courteous, kind, obedient, cheerful, thrifty, brave, clean, and reverent… do I have that right?) can be hard to find. Compensation figures in there somewhere, and in this continued era of cost-cutting remember that HUD sent out a note years ago about mortgage loan officers being W-2. (Press your “Control/Ctrl” key and “F” simultaneously. Then type in W-2. There are nine mentions.) The CFPB, in its examinations, looks at LO comp. One can always ask the CFPB questions through this site, but more weight is put on LO compensation requirements under the Truth in Lending Act (Reg. Z) which addresses total loan originator compensation. It states that total income is either wages and tips reported on a W-2 or reportable income on a 1099. See 12 CFR Part 1026 (pg. 11352). One can also see the Final rule: Loan Originator Compensation Requirements under the Truth in Lending Act (Regulation Z) (consumerfinance.gov), pgs. 262-63, 274, and 517. (Today’s podcast can be found here and sponsored by ReadyPrice, offering the industry’s most powerful universal delivery portal that gives brokers the edge they need. Shop, lock and deliver with multiple lenders, all in one place, for free! Hear an interview with ReadyPrice’s Rick Soukoulis on how to win broker business and the overall direction of the wholesale channel.) Lender and Broker Products, Services, and Software

A successful merger would culminate an over two-year period of major losses and pestered with criticism over the firm’s mass layoffs.

The company also has been upgrading technology to manage its large servicing portfolio, which, with pending additions, is within reach of Chairman and CEO Jay Bray’s $1 trillion goal.

The decline occurred even as interest rates held steady, but average loan amounts shot up due to a heightened slowdown of federally sponsored activity, the Mortgage Bankers Association said.