“I somehow managed to make it through high school math while only being able to remember even numbers. What are the odds?!” As the California MBA’s Western Secondary breaks up here in Southern California, numbers are dancing in everyone’s head. Volumes, margins, gain on sale, concessions, and extensions. (I even have a numerical riddle that stumped me below instead of the usual joke; even the solution had me befuddled.) A veteran LO once told me that she always looks at the coffee a potential client is drinking. Who is going to grouse more about .125 in rate, someone who makes their own coffee for less than $1 a cup or someone who buys it every day? At $5.74 per cup, a daily Starbucks latte costs $2,095 per year. Had you placed that amount in a high-yield savings account with a 4 percent return, you’d end up with $2,179 after one year, a modest $84 gain. Much larger gains could be realized over time if this money had been invested in equities. (Today’s podcast can be found here and this week’s is sponsored by ICE. By seamlessly integrating best-in-class solutions, ICE optimizes every stage of the loan life cycle, setting the standard for innovation, artificial intelligence, efficiency, and scalability, and defining the future of homeownership. Today’s has interview with Regal Point Capital’s Vijay Marolia on understanding how blockchain technology is seeping its way into mortgage transactions and how to prepare for the shift to a more digital landscape.) Products, Services, and Software for Lenders and Brokers

Mortgage rates hit fresh long term lows yesterday with the average top tier 30yr fixed rate at the best levels since October 3rd, 2024.  There wasn’t anything exceptional about the movement yesterday or on any other day in the past week.  Rather, it was the jobs report at the beginning of the month that accounted for a 2-day rally.  Rates have been holding near longer-term lows with little fanfare ever since. Because mortgage rates are based on bonds, the absence of fanfare reflects an absence of volatility in the underlying bond market. Today presented the biggest threat to that calm trend since the August 1st jobs report. Unlike the jobs report, today’s inflation data caused a volatile reaction in an unfriendly direction. In other words, the economic data put upward pressure on rates. The catch is that rates were set to start the day at even lower levels before the data came out.  The net effect is another day of fairly minimal change.

There’s no question that today’s Producer Price Index came in surprisingly hot. Both the headline and core numbers were 0.9% vs forecasts of 0.2%.  The biggest impact came from “trade services” which speaks to wholesalers and retailers marking up margins. There were similar anecdotes in other categories with BLS specifically calling out machinery/equipment, portfolio management, and vegetables. This was enough to erase a moderate overnight rally and cause some weakness in bonds, but it’s not nearly as big of a reaction as we’d be seeing if Tuesday’s CPI reported a similar beat.  PPI is a much more volatile data series and the components that flow through to PCE inflation suggest a smaller spike in consumer inflation. Nonetheless, upward movement in consumer inflation is eroding some of the recent improvement in Fed rate cut expectations.  

While private mortgage insurance still has a larger share of business than the Federal Housing Administration, the gap will continue to narrow through 2027.

Delinquencies within the segment eased from the first quarter to the second, but prepayments increased, Morningstar DBRS reported.

Approximately 60% of economists surveyed by Wolters Kluwer believe the Federal Open Market Committee will act at its next meeting with a 25 basis point cut.

The contract rate on a 30-year mortgage declined 10 basis points to 6.67% in the week ended Aug. 8, according to Mortgage Bankers Association data released Wednesday.

Gen Z and Millennial homeowners also face unexpected expenses after closing, underscoring need for more education on the part of mortgage professionals.

Data-Free Rally Day

Wednesday represented this week’s lull in terms of scheduled market movers on the calendar. Overnight gains game courtesy of strength in EU bonds as well as burgeoning expectations for a Fed rate cut at the September meeting (now roughly 100% priced-in according to Fed Funds Futures). There were no new reasons for changes in Fed Funds Futures beyond yesterday’s CPI release, so chalk it up to general tradeflow momentum. Thursday brings PPI which, while not as big a deal as CPI, can sometimes cause a noticeable reaction due to its impact on the broader PCE price index.

Econ Data / Events

MBA refi index

956.2 vs 777.4 prev

MBA Purchase Index

160.2 vs 158.0 prev

Market Movement Recap

09:14 AM Steadily stronger overnight with additional gains this morning.  MBS up 6 ticks (.19) and 10yr down 4.2bps at 4.248

01:01 PM Calmly holding gains. 10yr down 5.4bps at 4.234 and MBS up nearly a quarter point.

03:08 PM 10yr down 5bps at 4.239. MBS up 7 ticks (.22)

Mortgage application activity surged last week as sharply lower mortgage rates boosted refinance demand and gave purchase applications a modest lift. The Mortgage Bankers Association’s weekly survey showed a 10.9% increase in the seasonally adjusted Composite Index for the week ending August 8, 2025. “Mortgage rates fell to their lowest level since January, leading to a solid rebound in application activity,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “The 30-year fixed rate declined to 6.67%, the third straight weekly drop, and that pulled refinance applications to their highest level since early 2023. Purchase activity also picked up, driven by gains in both conventional and government segments.” The Refinance Index jumped 23% week-over-week and is now roughly 55% higher than the same week a year ago.  The Purchase Index rose 1.4% from the prior week and is running about 18% ahead of last year’s pace. Mortgage Rate Summary:
30yr Fixed: 6.67% (from 6.77%) | Points: 0.64 (up from 0.59)
15yr Fixed: 5.93% (from 6.03%) | Points: 0.63 (down from 0.66)
Jumbo 30yr: 6.70% (from 6.65%) | Points: 0.56 (down from 0.59)
FHA: 6.40% (from 6.47%) | Points: 0.77 (down from 0.81)
5/1 ARM: 5.80% (from 6.06%) | Points: 0.67 (up from 0.49)