Mortgage rates moved moderately higher for the average lender at some point over the past 2 days.  Some lenders bumped rates yesterday afternoon and thus didn’t need to make as big of adjustment today.  Other lenders who held steady yesterday were forced to make bigger changes today.  As always, the motivations for such decisions are primarily tied to trading levels in the bond market.  As bonds lose ground, the price of the bond falls and the yield (aka “rate”) increases.  This means we can often see a popular rate benchmark like the 10yr Treasury yield moving in concert with mortgage rates.  Indeed, 10yr yields are also at 2 week highs. Tomorrow brings the latest announcement from the Federal Reserve (the Fed).  The market already fully expects another 0.25% rate hike.  Instead, it will be the verbiage with which the hike is delivered that matters.   The Fed Funds Rate doesn’t directly dictate mortgage rates.  In other words, mortgage rates CAN move lower tomorrow even if the Fed hikes.  They can also move higher depending on what Powell has to say about the Fed’s policy stance.

After the last CPI report sent rates back down to the prevailing summertime range, we figured we’d be waiting until tomorrow’s Fed day for the next big shoe to drop.  While that’s generally been the case, rates haven’t managed to stay perfectly inside the range.  The closer we get to the day itself, the more upward pressure we’re seeing on yields.
Overnight trading offered some clues about the pre-Fed weakness.  The typical correlation between US and EU bonds broke down in a fairly noticeable way with Treasuries weakening while EU bonds rallied. 

Granted, neither move has been extreme, but the divergence is notable as it provides clues to Treasury-specific anxiety ahead of the Fed.  “Anxiety” in this context could be as simple as traders exiting long positions taken in the wake of the supportive bounce 2 weeks ago, or even the mini supportive bounce last week.  There’s also always a possibility that Treasury auctions add some undue pressure when they coincide with Fed week.

The S&P CoreLogic Case-Shiller Indices posted an annual decline in home prices for the second straight month in May while the Housing Price Index provided by the Federal Housing Finance Agency (FHFA) continues to show annual appreciation . Case-Shiller’s National Home Price Index, which covers all nine U.S. census divisions, was down 0.5 percent compared to a loss of 0.1 percent in April. The 1.0 decline in the 10-City Composite was a slight improvement from -1.1 percent the previous month. The 20-City Composite was unchanged from April’s 1.7 percent year-over-year loss. Month-over-month, however, prices were ascendent, Before seasonal adjustment, the National Index posted a 1.2 percent month-over-month increase and was up 0.7 percent after seasonal adjustment. in May. Both the 10-City and 20-City Composites rose 1.5 percent on an unadjusted basis while the 10-City Composite gained 1.1 percent and 20-City Composite 1.0 percent after adjustment. Chicago, Cleveland, and New York reported the highest year-over-year gains among the 20 cities in May. Chicago moved up one to the top spot with a 4.6 percent year-over-year price increase, while Cleveland was number two at 3.9 percent. New York debuted in the top three with a 3.5 percent increase. There was an even split of 10 cities reporting lower prices and those reporting higher prices in the year ending May 2023 versus the year ending April 2023. 

“I am part of the 4 percent who want to ban the teaching of math. We are a quarter of the country, and we will not be ignored! And that number is growing; soon we will be a fifth of the country!” While we’re being quantitative… Everyone knows that there are 50 stars on the United States Flag. In 1945 there were 48, before Alaska and Hawai’i were granted statehood. Someone should have told the folks who filmed or fact checked “Oppenheimer.” Continuing with numbers, the South or Midwest, which also boast the highest U.S. homeownership rates, are also the regions that have the highest rental vacancies in the nation, according to the U.S. Census Bureau’s Housing Vacancies and Homeownership data. The Midwest had the nation’s highest homeownership rate (70 percent) in the first quarter of 2023, followed by the South (67), Northeast (63) and West (62 percent). A bigger share of homeowners (41.6 percent) than renters (28.7 percent) had a bachelor’s degree or higher. They also earned more money, as median annual household income was $78,000 compared to renters’ $41,000. (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 FundingShield’s Ike Suri on the latest wire and title fraud findings.) Lender and Broker Products, Services, and Software Forty-five new agencies began offering DPA last quarter, signaling a sustainable groundswell in programs to support affordable financing. This is according to Down Payment Resource’s Q2 Homeownership Program Index (HPI) report, which dropped yesterday. What’s more, homebuyer assistance agencies are expanding program support of manufactured and multifamily properties to increase options for LMI buyers as inventory figures hover near historic lows. To get a full breakdown of the 2,373 homebuyer assistance programs available today, read DPR’s Q2 HPI report.

Overall sentiment in the segment shows 30% of businesses expect market conditions to become more favorable for them over the next six months, while 26% said they would get worse, according to a new study.

Buying Sculptor Capital Management could lead the real estate investment trust to explore an offering for the origination and servicing business in the near to mid-term, BTIG said.

The companies have requested an extension of the floating-rate loan, which matured in July, according to a servicer report.

Analysts look at whether the FOMC will bring the last rate hike in the cycle, whether recession is coming, and whether the Fed is making a policy mistake.

The acquiring company netted an incremental gain in shareholder buy-in with its previous postponement but not enough to push the transaction forward.

Housing finance organizations argue that these companies are relatively small, and allowing other agencies to be the first line of defense has worked.