Yesterday, we took a look at the recent winning streak for mortgage rates.  Specifically, they had moved lower for 5 straight days–a feat only achieved two other times this year.  While there have been streaks more than twice as long, the odds of a pull-back start increasing pretty quickly at the 5 day mark and today provided fresh evidence. Thankfully, the pull-back was very small with the average lender only moving up 0.01%.  That means many borrowers won’t see any difference in today’s rate quotes versus yesterday’s.  There were no major sources of volatility today for the bonds that underlie mortgage rate movement.  That’s a theme for the entire week when it comes to scheduled data.  Unexpected market movers are always a risk, but the biggest risks are tied to a few scheduled economic reports.  Next week’s Consumer Price Index remains the best example.

Token Pull Back Keeps Things Boring

Coming into this week, we expected things to be boring and sideways after last week’s more directional movement.  So far, everything is going according to that plan.  In order to maintain a boring, sideways stance today, the bond market needed to do a bit of selling lest the trend remain decidedly directional (it would have been the 6th straight day with lower yields).  Intraday volatility was modest at best.  Yields were higher at the outset and didn’t change much over the course of the day.  The 10yr auction had essentially no impact, but that’s understandable as it came in fairly close to expectations. 

Market Movement Recap

10:54 AM Modestly weaker overnight and into the 9am hour.  Bouncing a bit since 9:40am.  MBS still down an eighth and 10yr up 2.7bps at 4.485

01:03 PM Minimal reaction to 10yr auction.   MBS still down an eighth.  10yr up 3.1bps at 4.489

04:15 PM Very sideways into the close.  MBS down 5 ticks (.16) and 10yr yields up 4bps at 4.497

After a very long travel day filled with odd, time-sucking delays, when I arrived in Birmingham I was happy to hear Alabama on the Uber car’s radio singing, “My Home’s in Alabama.” “That my home’s in Alabama, no matter where I lay my head. My home’s in Alabama, Southern born and Southern bred.” Home prices in Alabama have tended to mimic many parts of the United States: In March 2024, home prices in Alabama were up 1.1 percent compared to last year, selling for a median price of $273,500 with the number of homes sold being down 8.9 percent year over year, per Redfin. (This morning NAR reported that more than 90 percent of metro markets posted home price gains in the first quarter of 2024: latest quarterly report.) There’s ample inventory, with over 22,000 homes for sale in Alabama, up nearly 11 percent year over year. A chunk of those are in Huntsville, 100 miles to the north of Birmingham, Alabama’s most populous city and the home of NASA’s Marshall Space Flight Center. (Found here, this week’s podcasts are sponsored by Matic, the digital insurance marketplace built for the mortgage industry. Matic integrates home insurance shopping into the lending and servicing experience, allowing customers to shop carriers and find a policy in minutes. Create a new revenue stream that boosts customer happiness today! Hear an interview with Matic’s Ben Madick on the insurance landscape and trends impacting both potential homebuyers and existing homeowners.) Lender and Broker Software and Services

One of the notions surrounding the Treasury auction cycle is that the bond trading community tends to build in a “concession” ahead of any given auction.  That’s a fancy word to say “rates go higher.”  Clearly, if that was always the case, speculators could reliably bet on it and, over time, it would get back to being less of a certainty.  Nonetheless, it is still a fairly reliable occurrence to see some selling ahead of an auction, albeit without predictable timing or magnitude.  The practical reason for this is that traders will buy $42bln in 10yr notes this afternoon, and that’s $42bln less in buying demand available before the auction.  Lower demand = lower prices = higher yields.  
All of the above assumes we’re talking about a level of movement that actually matters, and today’s movement really doesn’t.  So far, today’s narrow range is fully contained by yesterday’s range (i.e. today is an “inside day”). Moreover, it’s a very small uptick in yields that follows 5 straight days of gains.  This is one of those rare times that the future actually becomes less and less random. The more consecutive trading sessions bonds string together in the same direction, the more likely it becomes to see at least some sort of a push back in the other direction–even if only small and temporary.  

Lower interest rates allowed mortgage activity to rise modestly during the week ended May 3. It was the first increase in three weeks. The Mortgage Bankers Association said its Market Composite Index, a measure of the volume of mortgage applications, rose 2.0 percent on a seasonally adjusted basis compared to the prior week and 3.0 percent before adjustment. The Refinance Index increased 5.0 percent from the prior week but was 6.0 percent lower than the same week one year ago. The refinance share of mortgage activity increased to 30.6 percent of total applications from 30.2 percent the week before. [refiappschart] The Purchase Index ticked up 2.0 percent on both an adjusted and unadjusted basis but was still 17.0 percent lower than the same week in 2023. [purchaseappschart] “Treasury rates and mortgage rates fell last week on the news of a slowing job market, with wage growth at the slowest pace since 2021, and the Federal Reserve’s announced plans to ease quantitative tightening in June and to maintain its view that another rate hike is unlikely. The conventional 30-year rate dropped 11 basis points, and the FHA rate fell 17 basis points to 6.92 percent, back below 7 percent for the first time in three weeks,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “Mortgage applications increased for the first time in three weeks, with refinances up 5.0 percent. Even with the increase, which included a 29 percent jump in VA refinances, refinance application volume remains about 6 percent below last year’s already low levels.”

While the company made headway in reducing operational costs, it incurred several million dollars worth of expenses as it dealt with the January incident.

The rightsizing measures impacted workers in Colorado and Florida who worked at acquired Computershare Mortgage Services and its affiliate Specialized Loan Servicing.

The process of making changes to foreclosure prevention programs has been complicated by differences in how the Department of Veterans Affairs operates compared to an agency like the Federal Housing Administration.

Former Angel Oak Lending Chief Marketing Officer Steven Winokur has come back into the non-qualified mortgage business by taking a marketing role at Carrington Mortgage Services.

The Federal Open Market Committee thinks that confusing everyone completely is good for confidence, that intangible but entirely necessary ingredient for financial stability, writes the Chairman of Whalen Global Advisors.