Bond-Specific Weakness Over the past 6 months, as bonds continued to sell off, there was frequently some solace in the fact that the rate spike correlated with oil or diesel prices enough to hope that an oil price recovery would pave the way for a rate recovery. While there's likely still some benefit for bonds from a large, sustained drop in oil prices, the broader disconnect is increasingly conspicuous. Today was the latest example. Yields appeared to track with oil on the way up (for the most part). But when oil reversed course and moved back to 'unchanged' on the day, bond yields were…
Despite Friday afternoon's promising bond market rally and mortgage rate improvement, today's top tier 30yr fixed rate bounced back up. The average lender is now at 7.50% for the first time since April 30, 2024. While there's been a lot of short-term correlation between oil prices and interest rates over the last 6 months, oil does a poor job of explaining much of the recent upward momentum in rates. At times today, it seemed that the higher rates coincided with higher oil prices, but oil fell all the way back to Friday afternoon's levels at one point while rates remained elevated. The…
We’re waist deep in conferences (click here to view or add events), and every week I receive a half a dozen invitations to mortgage golf events centered around a conference. How about coming up with something where you can see and talk to more than three other people for 3-4 hours? Group hikes? Make-a-bear? Mini-golf? Bowling? Croquet? Pretzel making? Axe throwing? Perhaps we’ll see companies and state organizations shift their fund raising away from golf outings toward pickleball and bocce ball. Are President’s Award trips on their way out? There is no doubt that we should all celebrate…
Bonds lost ground overnight with traders reacting to Trump's rejection of Iran's proposal to reopen the Strait of Hormuz. This isn't the first time that bonds have reacted to war headlines regardless of movement in oil prices. While oil also moved higher throughout the overnight session, bonds are increasingly detached in the bigger picture with yields staying relatively higher as they wait for a substantive change in the war or the economy. For all of the drama and volatility, it's really that simple.
Respectable Recovery. Is It a Trap? First thing's first: the parabolic flourish of bond selling of the past 2 weeks is arguably unprecedented in recent memory. Specifically, we've seen similar levels of overall weakness over similar time frames, but we haven't seen the same sort of concentrated acceleration of selling at the tail end of a months-long selling trend. The only remotely comparable precedent was late September 2023 when a Fed dot plot surprised the market with a higher rate outlook followed by 2 weeks of stronger-than-expected econ data. There was a decent recovery on several…
The new home market returned to the longer-term range last month, with sales seeing their 4th biggest rebound in 4 years. Sales of new single-family homes rose to a seasonally adjusted annual rate of 684,000 in August, up 6.4% from July's revised 643,000 but 2.0% below the same month last year. The increase puts sales back above the 600,000 mark after July's pullback, although the broader trend remains relatively flat. The number of new houses for sale was virtually unchanged at 483,000 , down 2.0% from a year earlier. With sales picking up while inventory held steady, the implied…
Mortgage demand remained subdued last week as the 30-year fixed rate climbed above 7%. The Mortgage Bankers Association (MBA) reported a 1.5% decline in total mortgage application volume for the week ending September 18, following a 4.1% drop the week before. Purchase activity was the only saving grace. While technically 1% lower week-over-week, it has generally been moving sideways for the past few weeks. Refinance demand was more sluggish. The Refinance Index declined another 3% and was 62% lower than a year earlier. MBA said the pace of refinancing has now reached its slowest…
(NOTE: This article was updated at 5:30pm from the version originally published at 2:36pm ET to reflect late day rate improvements). Mortgage rates have risen more than half a point in 2 weeks. While that's certainly not the fastest jump we've seen, it is an extraordinarily uncommon pace--happening less than once per year on average (i.e. it only happened 3 times between 2010 and 2019). Today's initial increase was modest in the bigger picture, adding only 0.04% to yesterday's levels and leaving the average top-tier 30yr fixed rate still just a hair below 7.50%. This is roughly in line…
“Hey, it’s either network or no work.” For lenders, networking is an important part of their business. In addition, generally speaking, renters are prime “feeding grounds” for loan originators searching for clients. But there’s some disturbing signs out there: what if renters can’t even afford their rent? I was talking to a successful LO recently who uttered, “50 calls, 5 leads, 2 applications, 1 closing. The next day, 50 calls, 5 leads, 2 applications, 1 closing. Rinse and repeat, every day, it’s a pyramid.” Being an originator is a numbers game, as is running a branch. A manager recently…
10yr yields began the morning in slightly stronger territory, generally following a modest decline in oil prices overnight. That trend actually ran its course by 5am ET and yields began rising gradually at that time. Sellers picked up the pace after 10am (partly oil-related, but certainly also plenty of bond-specific selling pressure). Yields are now up a few bps on the day with the 10yr at 5.227 as of 10:45am. MBS, meanwhile are still just a hair stronger (though they've also lost ground at the same time as Treasuries). The outperformance has a lot to do with the yield curve today. Shorter…
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