A new Federal Reserve analysis finds rising debt-to-income and loan-to-value ratios over the past two years, while credit scores largely remained the same.

Lumber prices climbed higher for the first time since July, but prospects for single-family construction to grow look promising based on early-year data.

Citigroup’s earnings topped analysts’ estimates as corporations tapped markets for financing and consumers leaned on credit cards.

A doctrine giving some executives an extra layer of protection from depositions didn’t apply amid conflicting testimony about the leader’s actions, a magistrate ruled.

Time to Hurry Up and Wait Again

Friday ended up being reasonably pleasant, but mostly uneventful.  Gains were in place from the overnight session on a combination of European economic data and central banker comments.  Geopolitical headlines may have played a role at times, and end-of-week position squaring probably had some impact as well.  None of the above really matters in the bigger picture.  Bonds lost a lot of ground this week as inflation remained higher than the market hoped.  The end.  Now we wait for the next big data with the power to change that bigger picture narrative and that means we’ll be waiting for next month’s inflation reports.  It’s not that 2nd tier reports like next week’s Retail Sales or the following week’s PCE inflation are incapable of moving the needle, but they’d have a hard time moving it enough to shift a bigger picture trend.

Econ Data / Events

Import Prices

0.4 v 0.3 f’cast, 0.3 prev

Export Prices

0.3 vs 0.3 f’cast, 0.7 prev

Consumer Sentiment

77.9 vs 79.0 f’cast, 79.3 prev

1yr inflation expectations

3.1 vs 2.9 prev

5yr inflation expectations

3.0 vs 2.8 prev

Market Movement Recap

09:15 AM Much stronger overnight with gains tracking European bonds.  10yr down 8.8bps at 4.502.  MBS up 10 ticks (.31) in 6.0 coupons and 14 ticks (.44) in 5.5 coupons.

10:23 AM modest push back from 9 to 9:30am, but more modest gains after sentiment data.  10yr down 10bps to 4.493.  MBS up 3/8ths in 5.5 coupons and a quarter point in 6.0s.

04:51 PM Super sideways into 2pm and slightly weaker after that.  MBS still up 7 ticks (.23) in 6.0 coupons and 9 ticks (.28) in 5.5s.  10yr yields down 7.2bps at 4.521

Wednesday was one of the worst days in decades in terms of single-day upward movement in mortgage rates.  Thursday added a bit more insult to the injury.  The resulting levels were the highest since November 2023.  We should be thankful, then, that Friday managed to push back in the other direction, but it would be easier to be a lot more thankful if the improvement was a bit more robust. Of course, things could have been worse.  We could have continued to even higher rates, so the lamentation here is a being intentionally dramatized a bit.  Nonetheless, it’s a worth noting that the average lender is still basically right in line with the levels that broke our hearts on Wednesday afternoon. The optimists out there can cheer the fact that we mostly erased Thursday’s additional bump.  The rest of us will continue aspiring to live with such a glass-half-full mentality. As for the nuts and bolts, the bond market improved overnight and then slowly deteriorated for most of the domestic trading session.  The movement wasn’t big enough for most mortgage lenders to change rate sheets over the course of the day.  Instead, they set rates fairly conservatively in the morning (if they hadn’t, we likely would have seen some upward adjustments in the afternoon). The average lender is still in the 7.25-7.375% range for a top tier conventional 30yr fixed, but it’s easier to quote 7.125% today with some additional upfront cost.

When I win the lottery, I am going to buy one of these to heat my blankets at home. Of course, that would mean that I will have to start playing the lottery, so until then I’ll just have to rely on my cat Myrtle to prep things. Just because you own a home, doesn’t mean you’re wealthy; some homeowners live in poverty. A LendingTree analysis shows that more than 3 million families who live in owner-occupied homes in the U.S. earn incomes below the poverty threshold for their family. 7.4 million families across the nation earn incomes below their poverty threshold… nearly 9 percent living in poverty! Of the families in poverty, 41 percent live in owner-occupied housing units and 59 percent live in renter-occupied housing units. Montana, Vermont, and Idaho have the largest share of impoverished families living in owner-occupied homes, 55 percent on average. New York, Connecticut, and New Jersey have the smallest share of impoverished families living in owner-occupied homes at 29 percent on average. (If you want to dig into what “poverty” means, here you go.) (Found here after 8:30AM ET, this week’s podcasts are sponsored by PHH Mortgage. From subservicing to correspondent lending, MSR/co-issue transactions, portfolio retention, reverse mortgages, and commercial servicing, PHH has solutions for the entire mortgage lifecycle. Hear an interview with MCT’s Phil Rasori on the current state of the capital markets and the “holy grail” for pricing technology.) Lender and Broker Products, Software, and Services

Bonds began the overnight session in modestly stronger territory but the gains started adding up in earnest after European markets opened for the day.  A slew of respectable inflation readings and another survey on inflation trajectory helped juice European bonds and US Treasuries came along for the ride.  Then in early domestic trading, there was some speculation about flight-to-safety trading  with stock prices and bond yields moving lower together.  The jury is still out on geopolitical events driving bonds over the past 2 days (i.e. there are other ways to reconcile the move that could be more relevant).  Either way, the net effect was a solid improvement overnight. 

Additional gains have followed the Consumer Sentiment data with the only caveat being that we’ve barely begun to unwind this week’s losses.

Phil DeFronzo, founder of Norcom Mortgage, said the company made the “strategic decision to focus on [its] wholesale channel TPO GO.”

More than a quarter of the respondents to a Redfin survey don’t know how much their agent got, with 19% unaware of who actually paid them.