A pair of metrics that examine competition in the marketplace went in different directions in March, Zillow found.

A multiyear agreement will enable Mphasis to use AWS platforms for modeling industry-use cases, especially concerning data extraction and document processing.

The move advances the Biden administration’s interest in testing whether skipping a title insurance policy or an alternative for some mortgages would be a cost-saver.

The National Association of Home Builders/Wells Fargo index of housing market conditions held at 51 in April, still the highest since July but breaking a string of four straight monthly gains, according to data released Monday.

Sonu Mittal reflects on how technology can improve fraud prevention and Freddie Mac’s efforts help make loans safer and less expensive .

In 2023, there were multiple examples of mortgage rates moving up by roughly half a percent in a relatively short amount of time (1-3 weeks).  Since the big shift in November, we’ve only seen one similar example and it was more of a technicality (a sharp drop in rates followed by a correction in early Feb), until today. Rates were already on the run toward higher levels at a fairly abrupt pace last week.  The culprit was economic data, starting with the strong jobs report on April 5th and the far more troubling inflation data last Wednesday. Today’s Retail Sales report was the icing on this unpleasant data cake. To be clear, when it comes to Retail Sales, the data is actually very pleasant for the economy.  Unfortunately, what’s good for economic growth is often bad for rates and that’s doubly true at the moment when the market is waiting for more concrete evidence that the Fed’s tight monetary policy is restricting growth. In other, simpler words, this data does not line up with the notion of Fed rate cuts in the near term.  It also had an immediate negative impact on the rest of the bond market, including the bonds that most directly dictate mortgage rates. The average lender is now back into the mid 7s for a top tier, conventional 30yr fixed scenario.

Data-Driven Repricing Continues

There are two kinds of “repricing” to consider when you’re a mortgage market professional: the intraday change in rates among lenders when market move enough and the broader bond market shifting gears in response to some relatively rapid realization.  Today’s trading session spoke more to the latter, adding emphasis to a repricing that’s been underway for the entire month of April.  If there’s one culprit, it’s economic data.  The jobs report and CPI are the two obvious all stars, but today’s Retail Sales report made a strong case to be on the starting line up.  

Econ Data / Events

Retail Sales

.07 vs 0.3 f’cast
last month revised up to 0.9 from 0.6

NY Fed Manufacturing

-14.3 vs -9.0 f’cast, -20.9 prev

Market Movement Recap

08:37 AM Moderately weaker overnight with additional selling after Retail Sales data.  MBS down 10 ticks (.31) and 10yr up 8.4bps at 4.614

10:49 AM Additional weakness after several block trades and geopolitical headlines.  10yr up 10bps at 4.627.  MBS down almost half a point.

12:37 PM Sideways to slightly stronger since hitting the weakest levels earlier.  MBS down 3/8ths.  10yr at 4.630, off highs of 4.66+

03:27 PM Still flat at weaker levels.  MBS down 14 ticks (.44) and 10yr at 4.627.

The bond market sold off steadily and gradually overnight session despite news of escalation between Iran and Israel.  Ever since the start of the war in Ukraine, we’ve seen a different reaction function than we’re used to when it comes to geopolitical turmoil.  Inflation is the x factor as armed conflict can either suggest supply chain issues or imply increased government spending (which in turn implies Treasury issuance and incremental bond market weakness.  10yr yields were already up 5+ bps by the open.  After this morning’s strong Retail Sales data and additional headlines, the losses have more than doubled.

It is interesting to consider the role of oil prices vs bond yields when it comes to assessing geopolitical headlines that involve oil producing countries.  Correlated movement in bonds and oil can help confirm geopolitical motivations, but not always in a logical way.  In the chart below, volatility in oil and bonds does seem to correlate with geopolitical headlines, but note that the 2nd spike in oil only restored levels from earlier in the morning.

Zooming out to a slightly wider time horizon, we can see that oil prices haven’t been moving much recently AND that most of the movement has been positive correlated with yields (as opposed to today’s apparent inverse correlation).

No one is getting any younger, not even Clint Eastwood. Time marches on, as does, apparently, the cost of mailing a letter. The post office wants to jack the price of a stamp to 73 cents from 68 cents which took effect in January. But everything is politics these days, and out comes, “The Trump donor whom Biden can’t fire is running the U.S. Postal Service directly into the ground, just what everyone warned about when he was confirmed during the pandemic. The latest price hikes at USPS are just another sign of the unfavorable leadership of Postmaster General Louis DeJoy.” We have nearly seven months more of election cr-p. How about some good ol’ legal stuff? Neither side in the recent UWM lawsuit is likely to care to hear Brian Levy’s perspectives about the legal theories and people involved in the case, but I suspect many of you will. Levy’s most recent Mortgage Musings is chock full of sideways glances in footnotes, Don Corleone’s ethics, and of course, RESPA, among other stuff. (Found here after 8:30AM ET, this week’s podcasts are sponsored by Optimal Blue. OB’s smart solutions automate critical functions like pricing, hedging, trading, and social media. More originators and investors rely upon Optimal Blue’s integrated solutions, data, and connections to support their unique business strategies, no matter how complex. Hear an interview with Canopy’s Josh Neumarker on current pain points for originators and communication between management and sales staffs.) Lender and Broker Products, Software, and Services

Home loan originations were tepid in the first quarter, but higher margins helped large depositories bolster income even when the drop was particularly steep.