Mortgage rates fell to the lowest levels in a month last Tuesday and barely budged through the rest of the week. Now, at the start of the new week, the average lender is perfectly unchanged from last Friday. This means there are only a small handful of days with meaningfully lower rates going all the way back to late 2022. As the government shutdown continues, the bond market (which dictates rates) continues missing out on the bulk of relevant economic reports that normally help guide momentum throughout the month.  Depending on the day, however, there can be other sources of inspiration. In today’s case, the bond market took some solace from a well-received auction of US Treasuries. When it comes to auctions, when demand is stronger than expected, it can put some downward pressure on rates. This happened today, and it prompted a small handful of lenders to issue mid-day improvements, but it wasn’t enough to change the average rate.

The Arkansas-based company spent nearly four years on the M&A sidelines, grappling with asset quality issues and litigation tied to its 2022 acquisition of Texas-based Happy State Bank. Now it’s signed a letter of intent to buy an unnamed bank.

James is contesting charges brought earlier this month by a prosecutor whom President Donald Trump abruptly installed after her predecessor resigned under pressure.

The mortgage unit of Hilltop Holdings lost $7.2 million pretax in the third quarter with lower volume, following making a small profit three months prior.

The company cited efforts to improve profitability behind its decision, with Popular joining a line of other banks in ending mortgage operations in 2025.

The Federal Reserve Friday issued a set of proposed changes to its stress testing program for the largest banks that would disclose the central bank’s back-end stress testing models, a move that the Fed had long opposed out of fear of making the tests easier for banks to pass.

FHA loans accounted for about half of the annual rise in foreclosure starts and 80% of the rise in active foreclosures in September, according to ICE.

This morning brought the release of the much-anticipated Consumer Price Index (CPI). This is one of the two biggest inflation reports from the U.S. government, and the only government inflation report that’s coming out during the shutdown.  With big government data being a key consideration for interest rates, this special release got extra attention. Core monthly inflation was lower than expected (.227% vs 0.3 forecast) as was the annual level at 3.0% versus a median forecast of 3.1%. Inflation is the nemesis of interest rates, so the lower-than-expected result is rate-friendly at face value. The underlying bond market agreed to some extent.  The first reaction was stronger, thus implying lower mortgage rates. But mortgage lenders don’t tend to publish rates for the day until around 10am ET, 90 minutes after CPI came out.  In that time, bonds had second thoughts about how strong their reaction would be–possibly due to internal components of the data that suggested non-tariff-related inflation remains elevated outside after removing the impact from housing payments. Bonds remained in just barely stronger territory, but didn’t quite make it back to yesterday morning’s levels. As such, most mortgage lenders were just a hair higher in rate compared to yesterday–a completely logical outcome based on how bonds were trading. The best way to view today’s rate move (or lack thereof) in the context of the inflation data is to say that rates would have been more noticeably higher in the absence of CPI.

Decent Recovery After AM Backtracking

CPI data was a mixed bag for bonds.  Top-line numbers fueled a quick rally and digestion of the details brought us back to negative territory (albeit with help from stronger S&P PMI data). Bonds found their footing shortly after 10am at just slightly stronger levels and then stayed mostly sideways through the close.  Pretty ho-hum CPI day given all the anticipation…

Econ Data / Events

m/m CORE CPI (Sep)

0.227% vs 0.3% f’cast, 0.3% prev

m/m Headline CPI (Sep)

0.3% vs 0.4% f’cast, 0.4% prev

y/y CORE CPI (Sep)

3.0% vs 3.1% f’cast, 3.1% prev

y/y Headline CPI (Sep)

3.0% vs 3.1% f’cast, 2.9% prev

m/m SUPERCORE

.351 vs .330 prev

Market Movement Recap

09:51 AM Initially stronger after CPI data, but now turning red after PMI data.  MBS unchanged and 10yr up 1.2bps at 4.013

01:51 PM Crawling back into positive territory.  MBS up an eighth and 10yr down 1.2bps at 3.99

04:40 PM Heading out at just slightly stronger levels with MBS up an eight and 10yr yields down half a bp at 3.997

As shown in this video clip, don’t ever underestimate your opponent, or competitor. There were plenty of opponents and competitors at this week’s MBA Annual, and today on Last Word at 1PM ET, Brian Vieaux, Kevin Peranio, and Courtney Thompson discuss highlights from the conference, how the ongoing government shutdown could affect borrowers’ ability to pay and broader market stability, and what “shutdown economics” means for lenders, policymakers, and the housing industry heading into year-end. Affordability, or lack thereof, has been a major topic for the last few years, what with rising insurance costs, HOA fees, rates in the 6’s, and increasing property taxes. FHFA Director Bill Pulte announced a review of loan-level price adjustments, which are created by looking at the historical performance of loans with certain attributes, to potentially reduce fees for homeowners and buyers. The review could impact conventional mortgage fees, offering relief amid past controversies over fee structures. Anything helps, right? (Today’s podcast can be found here and this week’s are sponsored by nCino, makers of the nCino Mortgage Suite for the modern mortgage lender. nCino Mortgage Suite’s three core products nCino Mortgage, nCino Incentive Compensation, and nCino Mortgage Analytics, unite the people, systems, and stages of the mortgage process into a seamless end-to-end solution embedded with data-driven insights and intelligent automation. Hear an interview with Blue Sage Solutions’ Carmine Cacciavillani on modified workflows versus true artificial intelligence and how their partnership with Movement Mortgage is where the mortgage industry is headed.)