Coming off of what was considered a weak start to the spring season, mortgage applications for newly built homes rose 22% over the prior year, the Mortgage Bankers Association said.

Stakeholders are watching carefully as the 2023 crisis and a capital proposal increase banker wariness of mortgage assets, speakers at Invisso’s MBS Forum said.

The digital lender increased its marketing spend in the first quarter of 2024, with the ultimate goal of “Uber-izing the loan officer.”

Bonds Ready to go Big in Either Direction

If you only had 1 day per month to allocate to watching the bond market and getting a sense of rate momentum, Wednesday, May 15th would be that day.  Last month would have been April 10th.  And here’s the rest of the list: https://www.bls.gov/schedule/news_release/cpi.htm.  In other words, it has been and continues to be all about CPI.  Today’s PPI appetizer left the bond market hungry for the main course.  A big miss was offset by revisions and a favorable distribution of internal components.  Wednesday is anyone’s guess in terms of directionality.  All we know is that the size of the potential reaction is as big as it gets when it comes to scheduled economic data.

Econ Data / Events

Core m/m PPI

0.5 vs 0.2 f’cast
last month revised to -0.1 from +0.2

Annual core PPI

2.4 vs 2.4 f’cast/prev

Market Movement Recap

08:40 AM Inconsequential strength ahead of PPI data.  Initially weaker after the data, but recovering now.  10yr down 0.4bps at 4.485.  MBS up 1 tick (.03).

10:12 AM Additional strength at 9pm after OPEC headlines and fairly flat since then.  10yr down 2.6bps at 4.463.  MBS up 3 ticks (.09).

02:51 PM Slow, steady gains all day.  MBS up 6 ticks (.19) and 10yr down 4.4bps at 4.445

We’ve been waiting for tomorrow since April 10th.  That’s the last time the Consumer Price Index (CPI) was released.  This is one of the two official consumer-focused inflation indices in the U.S. and it comes out 2 weeks before the also important PCE price index.  With inflation being the top concern for interest rates these days, that makes CPI the most important scheduled economic report when it comes to rate volatility and momentum. People may know that “inflation is high” or that the price of various things is higher today than it was at some point in the past.  Indeed, it may be very easy–even popular–to lament the higher price of things.  But that has nothing to do with predicting how tomorrow will go.   Forecasts are already clear in their expectations for a 0.3% increase in core prices, month over month.  The difference between a result of 0.2 or 0.4 is surprisingly massive when it comes to the world of interest rates.  A 0.1 or 0.5 result could easily result in the largest rate jump/drop in months.   As for today, the Producer Price Index (PPI) offered an appetizer ahead of tomorrow’s main course.  Results were mixed, depending on whom you ask, but PPI doesn’t tend to elicit much of a response on average anyway.  In today’s case, initial weakness (aka “higher rates”) gave way to modest strength (“lower rates”) and the average mortgage lender was able to offer just slightly lower rates compared to yesterday.  This technically results in another 1-month low, but yet again, only by the smallest of margins

Attendees are gearing up for the upcoming MBA Secondary Conference in Manhattan. Basketball fans know it as the home of Madison Square Garden and are hoping for the Knicks to play the Celtics during the conference. Manhattan is also the home of Central Park. The Park, with some nice walks and runs, is large but not even in the top 100 in terms of acreage of city parks in the United States. 4 bedrooms and 3,300 square feet overlooking the place will set you back some. (And who would want to deal with a co-op board?) Speaking of outdoors and parks, the other day we took my granddaughter Kozette to a much smaller park, with a pond, to feed the ducks. Just as I was breaking out the week-old Wonder Bread, a woman commented, “Bread is one of the worst things you can feed ducks!” Sure ‘nuff, she was right! So, I gave them some leftover foie gras. Okay, just kidding. (Found here, this week’s podcasts are sponsored by LoanCare. The mortgage subservicer is known for delivering superior customer experience through personalization and convenience. Its award-winning portfolio management tool, LoanCare Analytics, supports MSR investors with a focus on customer engagement, liquidity, and credit risk. Hear an interview with Mitchell Sandler’s Daniella Casseres on fair lending jurisprudence and proving discrimination based on disparate impact.) Lender and Broker Software, Products, and Services Top originators are automating the entire funding process from warehouse funding decisions to purchase advice reconciliation and paydowns. By automating funding decisions through OptiFunder’s system, originators have saved millions of dollars of warehouse expense while enjoying the many workflow efficiencies OptiFunder has to offer. Customers are talking about their success. “Our funders love it.” “Outperforms expectations.” Check out these testimonial videos from Revolution Mortgage and V.I.P. Mortgage. OptiFunder is bringing the same incredible efficiencies to warehouse lenders. The news is out about Greyhound by OptiFunder, a modern alternative to legacy warehouse lending solutions. Greyhound by OptiFunder was recently recognized by Progress in Lending as a 2024 Innovations Award Winner. Visit with OptiFunder at TMBA Annual Conference or MBA Secondary and Capital Markets Expo to learn more. Sign up for OptiFunder’s monthly warehouse lending trends, out on the second Tuesday of each month.

The Producer Price Index (PPI) isn’t in the same league as CPI when it comes to market movement potential, but as seen again this morning, it’s no slouch.  Bonds responded immediately and somewhat forcefully to the much higher monthly core number.  10yr yields jumped an instant 5bps and MBS dropped 6 ticks (.19).  But less than 15 minutes later and we’re back near unchanged levels.  This wild ride can be chalked up to the previous month’s revisions offsetting the big miss as well as some of the distribution among the internal components.  Specifically, several of the components that contribute to PCE (the Fed’s favorite inflation index) were weaker.

Mother Lode Holdings’ purchase of Wisconsin Title Service adds to its network, which is concentrated in the Western U.S.

Rocket Mortgage entered into an agreement with the Department of Housing and Urban Development and will pay the consumers $65,000 to resolve the matter.

The digital lender also agreed with a former executive to drop her lawsuit accusing the company of misleading investors.