Credit risk transfers, a means by which banks can move risk off their balance sheets, earned considerable bipartisan support in a House Financial Services subcommittee hearing Wednesday.

Builder mortgage units saw Q1 profit slides (NVR down 17%) despite an 11% rise in new home loan applications. Overall homebuilder net income dropped, and sales incentives remain high.

The enterprises also still plan to add FICO 10T but the release of the historical data stakeholders in their market can use to assess it has taken longer.

The addition of HELOCs at SoFi comes alongside the launch of a new advisory group, as the company heightens its focus on real estate lending.

Toll Brothers’ purchase of Buffington Homes of Arkansas will extend its national outreach with a strong presence in northwest Arkansas, the company said.

Rates remain focused on oil prices and war-related developments. With yesterday’s ceasefire extension and today’s ambiguity over the time frame of that extension, rates are in a distinct holding pattern until the next phase of escalation/de-escalation comes into better focus. For now, the market is generally betting on de-escalation as seen in stocks being near all-time highs and bond yields (aka “rates”) being well off the highs seen in late March. In this environment, day to day rate movement is fairly incidental. Today’s installment brought modest improvement versus yesterday’s latest levels, but the average lender remains in the same tight range (6.29-6.33 for a best-case scenario 30yr fixed) that’s been intact for over a week now.

Uncertainty Extended Indefinitely

Heading into last night’s ceasefire expiration, there was a sense that the market would at least have something to provide a directional cue to break the recent range-bound monotony. Instead, not only was the ceasefire extended, but the new deadline is explicitly TBD. This makes the expiration of range-bound monotony similarly uncertain. Today’s almost perfectly flat trading session submits itself as evidence. All this having been said, the absence of a deadline doesn’t mean things can’t change precipitously.

Econ Data / Events

ADP Employment Change Weekly

54.75K vs — f’cast, 39K prev

Retail Sales (Mar)

1.7% vs 1.4% f’cast, 0.6% prev

Retail Sales Control Group MoM (Mar)

0.7% vs 0.2% f’cast, 0.5% prev

Pending Home Sales (Mar)

1.5% vs 0.1% f’cast, 1.8% prev

Market Movement Recap

09:27 AM MBS up 3 ticks (.09) and 10yr down 1.9 bps at 4.276

12:23 PM MBS now unchanged and 10yr also unchanged at 4.297

03:19 PM MBS up 2 ticks (.06) and 10yr down 0.3bps at 4.292

As a testament to just how confident the market is/was that neither side is overly interested in escalating the Iran war, Tuesday night’s ceasefire deadline has come and gone with surprisingly little fanfare. Yes, the ceasefire was technically extended, but the more relevant point is that oil prices have traded inside a 4 dollar range that covered both the bullish and bearish potential outcomes. We’ve been saying for several weeks that the next big move for the bond market will be reserved for a truly momentous development such as the complete end of hostilities/blockades or a massive escalation into full-blown war. As it stands, it’s a waiting game as Friday is now the earliest window for a potential resumption of peace talks. 
There’s a good case to be made for the market’s lower levels of apparent concern relative to earlier in the war. Simply put, oil prices are not threatening to cross some of the scarier lines in the sand seen in March. The chart below (which uses the 2nd delivery month futures contract to tone down the volatility a bit) shows the scariest line. In addition, it’s worth noting that current prices are merely in the middle of an uptrend that’s been intact a majority of the time since 2015.   In other words, these levels just aren’t alarming enough for genuine market panic.

The consolidation in bonds mirrors the cooling in oil prices.

Today we have a press conference with HUD Secretary Scott Turner and U.S. Federal Housing Director Bill Pulte announcing “a significant development in the U.S. housing finance system” at 12:45PM ET. Rumors run the gamut from “operationalizing” VantageScore to moving control of the FHA & VA programs under Pulte and the FHFA. Meanwhile, the capital markets have a lot on “their” mind, and I received this note. “Rob, I’ve heard that hedge funds own a record percentage of U.S. Treasuries. Does that impact mortgage rates for my borrowers?” Anything impacting supply and demand of fixed-income securities can impact mortgage rates. Per Apollo, you are correct: $6 trillion, or 8 percent of the outstanding debt of our federal government is owned by companies that use complex trading and risk management techniques. U.S. stocks have reached record highs despite the ongoing war with Iran, an oil shock, and warnings of sluggish economic growth. Perhaps investors view the conflict as temporary and expecting resolution, with investors also showing confidence in tech stocks. The stock market is always trying to price what the world is going to look like months from now. Its dog eat dog among hedge funds, and if they collectively think a profit-making opportunity is disappearing, they’ll move quickly. (Today’s podcast can be found here and this week’s ‘casts are sponsored by Experian Verify, a comprehensive income and employment verification solution for mortgage lenders. By uniting instant payroll data, permissioned access, and research verification in one seamless experience, Experian Verify helps lenders reduce friction, accelerate decisions, and confidently verify every U.S. worker. Today’s has an interview with loanDNA’s Neil Sahota on how the mortgage value chain is being reshaped, from origination through servicing, and what that means for lenders trying to stay competitive.)

The new law adds rules, including counseling requirements, which would put severe constraints on originations of HEIs, an industry representative said.