Rocktop Management anticipates rising loan origination volume and increasing borrower distress, driving more servicing sales — key reasons behind its acquisition of Incenter Capital Advisors.

The rule rescission, one of many the Consumer Financial Protection Bureau is planning, would officially remove temporary steps for mortgages added in 2021.

Lenders using an automated process can save up to $1,500 per loan but do they have the capacity to pass those through to applicants as the FHFA director asks?

Moody’s Pulls Pin And Walks Away With 10 Minutes Left to Trade

Bonds began the day stronger after a gentle overnight rally. Selling commenced at 9:30am for the 4th day in a row and picked up slightly after the highest reading on inflation expectations since 1981. Even then, losses were modest at best and bonds were generally flat/unchanged until the very end of the day. With carefully considered timing, Moody’s pulled the pin and walked away with 10 minutes left to trade. The grenade in this case was a downgrade of the US credit rating.  This move is certainly in the ratings agencies’ playbooks amid congressional budget battles, but most notably all the way back in 2011. Also of note, Moody’s was the last of the big 3 to have the US at a triple A rating, so while it’s not the craziest thing that ever happened to bonds, the timing made for some last minute selling ahead of the 5pm cut-off. 

Econ Data / Events

Housing Starts

1.361m vs 1.37m f’cast

Import Prices

0.1 vs -0.4 f’cast, -0.4 prev

Consumer Sentiment

50.8 vs 53.4 f’cast, 52.2 prev

1yr inflation expectations

7.3 vs 6.5 prev

Market Movement Recap

10:04 AM modestly stronger overnight and slowly eroding so far.  MBS up 2 ticks (.06) and 10yr down 2.8bps at 4.403

02:06 PM Sideways at weakest levels.  MBS down 1 tick (.03) and 10yr up about half a bp at 4.437

05:03 PM additional weakness after Moody’s downgrade.  MBS down a quarter point on the day and 10yr up roughly 5bps at 4.479

The Census Bureau is out with monthly construction numbers for April showing an uptick in construction activity offset by slightly lower permitting.  While there are several other metrics in this report, building permits and housing starts (which measures when construction actually begins) are the two that are most widely followed. As seen in the chart below, housing starts tend to be more volatile, month to month.  In the present case, however, they were only slightly higher than the previous month at an annual pace of 1.361 million vs 1.339 million. Starts would have fallen had it not been for the multifamily sector.  Single unit starts dropped from 947k to 927k while multifamily starts surged from 378k to 420k, the highest since late 2023. Over the past few years, there are several housing and mortgage market metrics that paint a fairly gloomy picture.  Applications and builder confidence come to mind.  While the construction data is not as strong as it was a few years ago, it remains one of the better examples of strength in the sector as it remains higher than most of the pre-pandemic time frame.

The average top tier 30yr fixed rate is set to end the week just a few hundredths of a percent higher than last Friday at 6.92%.  That’s a victory–albeit a small one–after hitting 6.99% on Wednesday. As always, these rates refer to an index representing broad industry averages for best-case scenarios. Individual lenders and scenarios can be quite a bit different for a variety of reasons. Today’s rate change is a bit misleading because it left us in slightly better shape versus yesterday. The bond market (which is directly responsible for mortgage rate changes) disagrees. Whether we’re talking about mortgage-specific bonds or their more popular older sibling US Treasuries, bonds were just a hair weaker across the board. Weaker bonds = higher rates, all other things being equal. The discrepancy comes down to timing and the rate setting practices of mortgage lenders. Specifically, bonds improved late enough in the day yesterday that many lenders didn’t fully adjust their mortgage rates to reflect the gains.  Then this morning, bonds signaled even lower rates before ultimately moving back to more neutral levels.  Some lenders bumped rates slightly higher as a result, but the average lender is still slightly below yesterday’s rates and bond market levels are still slightly better than they were when most lenders released their last rate update yesterday. If this is all a bit confusing, remember that mortgage rates only change once or twice a day, apart from extremely volatile trading days. Meanwhile, the bond market is changing every second. Lenders have to decide where to set rates based on that moving target.  Here’s how the past two days looked to the average lender:

Home purchase demand improved improved last week according to the MBA mortgage application survey. The improvement over the previous week was fairly modest, but the index was already the 4th highest reading of the past 2 years.  Now it’s the 5th highest and the latest update takes its place, moving within striking distance of longer term highs. It’s no secret that most measures of mortgage and housing activity have been operating in a low, narrow range compared to where they were a few years ago. The mortgage rate spike of 2022 gets most of the credit for that, and a longer term chart of refinance demand helps contextualize shorter term trends. All that to say, we have to zoom in if we hope to see changes in application demand. In so doing, we find refinance activity still elevated relative to most of the past few years, but not in the ‘boomlet’ territory seen last Fall. The absence of significant week-over-week movement in refi demand makes good sense in light of minimally-changed mortgage rates. MBA logged a 0.02% increase in the average 30yr fixed rate from the previous week which aligns fairly well with our daily rate tracking.   Since then, rates moved a bit higher through mid-week, but have dropped heading into the weekend. The net effect shouldn’t be massive for application demand. Here’s the MBA’s surveyed changes in various rates and points (difference from last week in parentheses):

30yr Fixed:

6.86% (+0.02) 

Points: 0.68 (no change)

Jumbo 30yr:

6.85% (−0.01)

Points: 0.49 (+0.03)

FHA:

6.59% (+0.03)

Points: 0.89 (+0.02)

15yr Fixed:

6.12% (−0.05)

Points: 0.59 (−0.06)

5/1 ARM:

6.09% (+0.12)

Points: 0.74 (+0.43)

The National Association of Homebuilders (NAHB) and Wells Fargo released the monthly Housing Market Index (HMI) this week, showing builder confidence falling to the lowest levels since 2023.  This is about as low as the index has been since the housing crisis more than a decade ago. While persistently high interest rates remain a top concern for the housing market, a growing number of builders cited difficulty pricing new homes in light of the rapidly changing outlook for material costs due to tariffs.  With that in mind, it’s important to note that 90% of this month’s responses came in  before the US/China trade announcement.  Not only did that announcement drastically reduce tariffs for 90 days, it also offered a proof of concept that will likely see the outlook improve in the next survey due to lower material costs and a more upbeat consumer. Additional details are available at https://www.nahb.org/news-and-economics/housing-economics/indices/housing-market-index.

One of the tools introduced is a voicebot, dubbed Mia, which helps with consumer retention by making calls to check on clients for UWM broker partners.

The title insurance industry, highly dependent on mortgage origination volume, recovered after watching volume fall 31% in 2023 and 16% in 2022.