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21st February, 25
Solid Conclusion to a Solid Week
Solid Conclusion to a Solid Week Bonds benefited from a one-two punch of economic data and stock market weakness on Friday, eventually helping 10yr yields flirt with their lowest levels since December 18th (Feb 5th and 7th still technically a hair lower). MBS have outperformed over that time, briefly hitting December 13th levels during today's best moments. While the morning gains were clearly tied to the S&P PMI data, afternoon gains came courtesy of a flight to safety with investors dumping stocks aggressively. Econ Data / Events S&P Services PMI 49.7 vs 53.0 f'cast
Solid Conclusion to a Solid Week
Solid Conclusion to a Solid Week Bonds benefited from a one-two punch of economic data and stock market weakness on Friday, eventually helping 10yr yields flirt with their lowest levels since December 18th (Feb 5th and 7th still technically a hair lower). MBS have outperformed over that time, briefly hitting December 13th levels during today's best moments. While the morning gains were clearly tied to the S&P PMI data, afternoon gains came courtesy of a flight to safety with investors dumping stocks aggressively. Econ Data / Events S&P Services PMI 49.7 vs 53.0 f'cast
21st February, 25
Mortgage Rates End Week at Lowest Levels Since December 18th
Back on December 18th, rates began the day fairly close to where they ended the previous day. In the afternoon, rates surged sharply higher following the Fed announcement. Even since then, the average 30yr fixed rate has operated almost exclusively above 7%. Rates dipped a pinky toe into the 6% range on Feb 5th and then a few more toes last Friday. Now today, we're ending another week with damp digits, right in line with last Friday at the best levels since December 18th. Today's improvement was initially driven by weak economic data this morning in the form of S&P Global
Mortgage Rates End Week at Lowest Levels Since December 18th
Back on December 18th, rates began the day fairly close to where they ended the previous day. In the afternoon, rates surged sharply higher following the Fed announcement. Even since then, the average 30yr fixed rate has operated almost exclusively above 7%. Rates dipped a pinky toe into the 6% range on Feb 5th and then a few more toes last Friday. Now today, we're ending another week with damp digits, right in line with last Friday at the best levels since December 18th. Today's improvement was initially driven by weak economic data this morning in the form of S&P Global
21st February, 25
Refi Apps Still Near Best Levels Since October, Despite Larger Decline This Week
Per the latest release from the Mortgage Bankers Association (MBA), both refinance and purchase indices decreased this week. In terms of the change from the previous week, it was the biggest drop so far this year, but not remotely as big as last week of 2024. Here is the refi index in terms of week-over-week change: And here is the exact same data, but expressed in terms of the outright index: If we're just focusing on 2025, the chart above doesn't look too bad for refi demand. But in case anyone needed to be reminded, the farther back one looks into the past, the more sobering the
Refi Apps Still Near Best Levels Since October, Despite Larger Decline This Week
Per the latest release from the Mortgage Bankers Association (MBA), both refinance and purchase indices decreased this week. In terms of the change from the previous week, it was the biggest drop so far this year, but not remotely as big as last week of 2024. Here is the refi index in terms of week-over-week change: And here is the exact same data, but expressed in terms of the outright index: If we're just focusing on 2025, the chart above doesn't look too bad for refi demand. But in case anyone needed to be reminded, the farther back one looks into the past, the more sobering the
21st February, 25
Building Permits Staying Fairly Calm as Housing Starts Whipsaw
The Census Bureau released its New Residential Construction report this week, frequently referred to by its principal component "housing starts" (a term for the start of the first phase of new home construction). In addition to housing starts, the data also logs building permits as well as completions. There's not always a perfectly linear correlation between the various metrics for a variety of reasons. Some permits never turn into construction, for instance. Sometimes there's a backlog of permits waiting on materials, labor, or weather before construction can begin. In
Building Permits Staying Fairly Calm as Housing Starts Whipsaw
The Census Bureau released its New Residential Construction report this week, frequently referred to by its principal component "housing starts" (a term for the start of the first phase of new home construction). In addition to housing starts, the data also logs building permits as well as completions. There's not always a perfectly linear correlation between the various metrics for a variety of reasons. Some permits never turn into construction, for instance. Sometimes there's a backlog of permits waiting on materials, labor, or weather before construction can begin. In
21st February, 25
Builder Confidence Dropped, But Not Enough to Jump to Conclusions
The National Association of Homebuilders (NAHB) along with Wells Fargo released the monthly builder confidence index this week, and it came out much weaker than expected. With tariff and immigration news rapidly evolving, it's tempting to conclude that any major changes in homebuilder sentiment would be directly related. For instance, if builders think that building materials could be harder to obtain or more expensive, it generally hits the confidence index. This would be a particularly big problem with something like lumber as the U.S. imports roughly a third of its framing
Builder Confidence Dropped, But Not Enough to Jump to Conclusions
The National Association of Homebuilders (NAHB) along with Wells Fargo released the monthly builder confidence index this week, and it came out much weaker than expected. With tariff and immigration news rapidly evolving, it's tempting to conclude that any major changes in homebuilder sentiment would be directly related. For instance, if builders think that building materials could be harder to obtain or more expensive, it generally hits the confidence index. This would be a particularly big problem with something like lumber as the U.S. imports roughly a third of its framing
21st February, 25
Near Best Levels in Months After AM Econ Data
MBS are very close to their February 5th levels, which were the best since the morning of December 18th before the Fed announcement (and dot plot) caused a big sell-off. Today, it's econ data that's contributing to the third day in a row of moderate gains. Specifically, S&P Services PMI dropped sharply to levels that are consistent with economic contraction, significantly undershooting expectations. Bonds responded immediately with MBS adding to overnight gains for a total of a quarter point day over day.
Near Best Levels in Months After AM Econ Data
MBS are very close to their February 5th levels, which were the best since the morning of December 18th before the Fed announcement (and dot plot) caused a big sell-off. Today, it's econ data that's contributing to the third day in a row of moderate gains. Specifically, S&P Services PMI dropped sharply to levels that are consistent with economic contraction, significantly undershooting expectations. Bonds responded immediately with MBS adding to overnight gains for a total of a quarter point day over day.
21st February, 25
Verification, LO Database, Construction Appraisal Tools; Fiscal vs. Monetary Policy
While much of the nation deals with the severe cold, I received this note from a new loan officer in Oklahoma. “Rob, I overheard my secondary group talking about a ‘PITA’ price adjustment. I didn’t want to show my ignorance. What is it?” You should ask your team, as it refers to a price handicap given to investors that your secondary group doesn’t want to sell loans to for whatever reason, usually continuing operational issues, making that investor a “pain in the ---" to deal with. Secondary and capital markets teams also deal with prices and interest rates. (The Last Word has a
Verification, LO Database, Construction Appraisal Tools; Fiscal vs. Monetary Policy
While much of the nation deals with the severe cold, I received this note from a new loan officer in Oklahoma. “Rob, I overheard my secondary group talking about a ‘PITA’ price adjustment. I didn’t want to show my ignorance. What is it?” You should ask your team, as it refers to a price handicap given to investors that your secondary group doesn’t want to sell loans to for whatever reason, usually continuing operational issues, making that investor a “pain in the ---" to deal with. Secondary and capital markets teams also deal with prices and interest rates. (The Last Word has a
20th February, 25
Very Low Volatility After Early Morning Rally
Very Low Volatility After Early Morning Rally Bonds were sideways to slightly weaker in the overnight session, but bounced back at 7am ET. The two most notable developments at the time were weak earnings from Wal-Mart and a comment from Bessent on the mix of Treasury issuance. While the former may be an easier thing to understand and write about, the latter served as the source of the bond rally. Bessent essentially said he wasn't in a hurry to add more longer-term debt relative to short-term debt, and that's good for things like mortgage rates, all other things being equal. It's also
Very Low Volatility After Early Morning Rally
Very Low Volatility After Early Morning Rally Bonds were sideways to slightly weaker in the overnight session, but bounced back at 7am ET. The two most notable developments at the time were weak earnings from Wal-Mart and a comment from Bessent on the mix of Treasury issuance. While the former may be an easier thing to understand and write about, the latter served as the source of the bond rally. Bessent essentially said he wasn't in a hurry to add more longer-term debt relative to short-term debt, and that's good for things like mortgage rates, all other things being equal. It's also
20th February, 25
Mortgage Rates Casually Drift Back to 2 Month Lows
It was a fairly decent day for mortgage rates with the average lender returning to the lowest levels in just over 2 months. The improvement followed early morning comments from Treasury Secretary Scott Bessent regarding the probable mix of future Treasury debt. What's that got to do with mortgage rates? So much... Mortgage rates are based on mortgage-specific bonds that are in the same extended family as US Treasuries. If Treasuries are like oranges, mortgages are like orange juice--i.e. they're sort of a substitute for some people, but either way, heavily dependent on the
Mortgage Rates Casually Drift Back to 2 Month Lows
It was a fairly decent day for mortgage rates with the average lender returning to the lowest levels in just over 2 months. The improvement followed early morning comments from Treasury Secretary Scott Bessent regarding the probable mix of future Treasury debt. What's that got to do with mortgage rates? So much... Mortgage rates are based on mortgage-specific bonds that are in the same extended family as US Treasuries. If Treasuries are like oranges, mortgages are like orange juice--i.e. they're sort of a substitute for some people, but either way, heavily dependent on the
20th February, 25
Stronger Start. Thank Walmart or Bessent?
There's an interesting little case study in this morning's market movement. Bonds had been sideway to very slightly weaker overnight, but began to rally at 7am ET. The most notable market headline available at the time was news of Walmart's disappointing earnings. Some market journalists credited the earnings as a catalyst for safe haven bond buying. At almost exactly the same time, Treasury's Bessent said in a Bloomberg interview that Treasury is a long way from adding duration to the Treasury issuance profile--something some market participants had feared. "Adding duration" means
Stronger Start. Thank Walmart or Bessent?
There's an interesting little case study in this morning's market movement. Bonds had been sideway to very slightly weaker overnight, but began to rally at 7am ET. The most notable market headline available at the time was news of Walmart's disappointing earnings. Some market journalists credited the earnings as a catalyst for safe haven bond buying. At almost exactly the same time, Treasury's Bessent said in a Bloomberg interview that Treasury is a long way from adding duration to the Treasury issuance profile--something some market participants had feared. "Adding duration" means
