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12th August, 26
Asset-Based Loan, Loss Mit, Verification, AI-Native Execution; On-Site Events for your Calendar; Inflation Data
One of the panels during this year’s California MBA Western Secondary focused on the ramp up of non-Agency/equity lending. Why has it increased as a portion of the overall residential origination pie? It is attributed to a changing economy and changing borrowers, along with record equity. Add in the high percentage of borrowers who have first-lien mortgage rates below 5 percent (the “lock in effect”). There’s consumer pressure (high debt), equity extraction, the 40 percent of owners don’t have a mortgage, so owners are levering. From Freddie and Fannie’s perspective, the Agencies
Asset-Based Loan, Loss Mit, Verification, AI-Native Execution; On-Site Events for your Calendar; Inflation Data
One of the panels during this year’s California MBA Western Secondary focused on the ramp up of non-Agency/equity lending. Why has it increased as a portion of the overall residential origination pie? It is attributed to a changing economy and changing borrowers, along with record equity. Add in the high percentage of borrowers who have first-lien mortgage rates below 5 percent (the “lock in effect”). There’s consumer pressure (high debt), equity extraction, the 40 percent of owners don’t have a mortgage, so owners are levering. From Freddie and Fannie’s perspective, the Agencies
12th August, 26
No Major Reaction to As-Expected CPI
It would have been hard for CPI to be any more boring. All key metrics came in perfectly in line with forecasts. Supercore (core minus housing), was 0.189, which is a monthly equivalent of "close enough to the 2.0% target." Core CPI itself was 0.215%, which extrapolates to 2.58% year-over-year. The volume response let's us know that traders were indeed ready to trade this data, but logically, it's hard to make a case for a directional bias when everything in the report was so bland. In other news, bonds rallied overnight, so "flat after CPI" means we're holding moderate gains.
No Major Reaction to As-Expected CPI
It would have been hard for CPI to be any more boring. All key metrics came in perfectly in line with forecasts. Supercore (core minus housing), was 0.189, which is a monthly equivalent of "close enough to the 2.0% target." Core CPI itself was 0.215%, which extrapolates to 2.58% year-over-year. The volume response let's us know that traders were indeed ready to trade this data, but logically, it's hard to make a case for a directional bias when everything in the report was so bland. In other news, bonds rallied overnight, so "flat after CPI" means we're holding moderate gains.
11th August, 26
Bonds Looking Somewhat Optimistic Ahead of CPI
Bonds Looking Somewhat Optimistic Ahead of CPI Bonds improved modestly on Tuesday which is actually a somewhat resilient/optimistic showing. The ongoing correlation with oil prices suggested less improvement (oil actually closed higher on the day). In addition, it's usually less of a surprise to see bonds struggle to rally on the first half of an auction cycle week. Granted, a spicy CPI on Wednesday would easily push back against any optimistic narratives, but if the data is tame, perhaps we're seeing hints that bonds would be more willing to respond than normal. Market Movement Recap 09
Bonds Looking Somewhat Optimistic Ahead of CPI
Bonds Looking Somewhat Optimistic Ahead of CPI Bonds improved modestly on Tuesday which is actually a somewhat resilient/optimistic showing. The ongoing correlation with oil prices suggested less improvement (oil actually closed higher on the day). In addition, it's usually less of a surprise to see bonds struggle to rally on the first half of an auction cycle week. Granted, a spicy CPI on Wednesday would easily push back against any optimistic narratives, but if the data is tame, perhaps we're seeing hints that bonds would be more willing to respond than normal. Market Movement Recap 09
11th August, 26
Mortgage Rates Sideways to Slightly Higher
It ended up being a remarkably uneventful day for mortgage rates. Some lenders were slightly higher than yesterday. Others were roughly unchanged. The difference came down to whether the lender in question raised rates yesterday afternoon. What does this mean? Lenders prefer to set rates once per day around 10am ET. But if the underlying bond market makes a big enough move, lenders can change rates during the day. Bonds lost just enough ground yesterday for some lenders to raise rates. Contrast that to today where virtually every lender maintained the same levels throughout. Tomorrow morning
Mortgage Rates Sideways to Slightly Higher
It ended up being a remarkably uneventful day for mortgage rates. Some lenders were slightly higher than yesterday. Others were roughly unchanged. The difference came down to whether the lender in question raised rates yesterday afternoon. What does this mean? Lenders prefer to set rates once per day around 10am ET. But if the underlying bond market makes a big enough move, lenders can change rates during the day. Bonds lost just enough ground yesterday for some lenders to raise rates. Contrast that to today where virtually every lender maintained the same levels throughout. Tomorrow morning
11th August, 26
HELOC, AI Processing Tools; STRATMOR on Subservicing; MISMO Role; RESPA Thoughts
What are folks talking about here at the Western Secondary? Small things and big things. There’s a brand-spankin’ new private MI company: Anza. (Contact Melissa Gemma with questions.) Lenders are doing interesting things to help communities: for example, here’s Fairway Independent not leaving a dry eye in the house. That UWM has filed a lawsuit in federal court regarding the Two Harbor/CrossCountry deal is no surprise, although $500 million is attention-grabbing. China unleashes $28 trillion (yeah, with a “t”) capital markets to challenge the United States. We’ve heard about
HELOC, AI Processing Tools; STRATMOR on Subservicing; MISMO Role; RESPA Thoughts
What are folks talking about here at the Western Secondary? Small things and big things. There’s a brand-spankin’ new private MI company: Anza. (Contact Melissa Gemma with questions.) Lenders are doing interesting things to help communities: for example, here’s Fairway Independent not leaving a dry eye in the house. That UWM has filed a lawsuit in federal court regarding the Two Harbor/CrossCountry deal is no surprise, although $500 million is attention-grabbing. China unleashes $28 trillion (yeah, with a “t”) capital markets to challenge the United States. We’ve heard about
11th August, 26
Stronger Start on Yet Another Peace Deal Teaser
Bonds are rallying, and we have no objection to that. Reasons are simple and familiar enough that there's no sense in over-analyzing them. Newswires hit at 7am saying that Pakistan's defense minister said "things are shaping up in favor of peace" and that Pakistan's interior minister Khawaja Asif arrived in Tehran to discuss "matters of mutual interest." Oil prices and bond yields are well versed in cautious reactions to such headlines. They're not ever going to cause a massive reaction, but just like the last 40-50 examples, they're enough for a noticeable but modest shift in trading levels.&
Stronger Start on Yet Another Peace Deal Teaser
Bonds are rallying, and we have no objection to that. Reasons are simple and familiar enough that there's no sense in over-analyzing them. Newswires hit at 7am saying that Pakistan's defense minister said "things are shaping up in favor of peace" and that Pakistan's interior minister Khawaja Asif arrived in Tehran to discuss "matters of mutual interest." Oil prices and bond yields are well versed in cautious reactions to such headlines. They're not ever going to cause a massive reaction, but just like the last 40-50 examples, they're enough for a noticeable but modest shift in trading levels.&
10th August, 26
Issuance and Oil Strike Back
Issuance and Oil Strike Back Oil prices continue to ebb and flow in concert with the Iran war news cycle. There's no set schedule for such things, but there have been several Mondays where that narrative shifts in the opposite direction from wherever we left off at the end of the previous week. Last Wednesday was a recent low for oil and prices have risen since then. Today's increase was a bit of an acceleration so it's no surprise to see bond yields follow. Bonds also saw some mid-day pressure from an active corporate debt issuance landscape, but it's just as fair to say both
Issuance and Oil Strike Back
Issuance and Oil Strike Back Oil prices continue to ebb and flow in concert with the Iran war news cycle. There's no set schedule for such things, but there have been several Mondays where that narrative shifts in the opposite direction from wherever we left off at the end of the previous week. Last Wednesday was a recent low for oil and prices have risen since then. Today's increase was a bit of an acceleration so it's no surprise to see bond yields follow. Bonds also saw some mid-day pressure from an active corporate debt issuance landscape, but it's just as fair to say both
10th August, 26
Mortgage Rates Rise Modestly From 3 Week Lows
As of last Friday, average top-tier mortgage rates hit their lowest levels since July 20th. If they'd managed to drop even 0.01% today, it would have been a new 3-week low. As it stands, rates moved modestly higher in response to higher oil prices. Throughout the Iran war, oil and rates have had a broadly strong correlation because oil informs inflation expectations and inflation is a key input for the rate market. Even after today's rise, rates remain much closer to the lower end of the range over the past 3 weeks. Logically, any positive developments in the war or diplomacy should
Mortgage Rates Rise Modestly From 3 Week Lows
As of last Friday, average top-tier mortgage rates hit their lowest levels since July 20th. If they'd managed to drop even 0.01% today, it would have been a new 3-week low. As it stands, rates moved modestly higher in response to higher oil prices. Throughout the Iran war, oil and rates have had a broadly strong correlation because oil informs inflation expectations and inflation is a key input for the rate market. Even after today's rise, rates remain much closer to the lower end of the range over the past 3 weeks. Logically, any positive developments in the war or diplomacy should
10th August, 26
Land Loan, Agentic AI Tools; Deep Dive Into Earnings; Pennymac's Spector on Servicing Value
Here in the hallways at the Western Secondary in L.A., there isn’t a lot of talk about GSE reform, although this short clip from Sam Valverde, ex-acting president of Ginnie Mae, revisits the subject: The GSE reform trigger nobody's watching closely enough. More of the talk is about 2nd quarter earnings, and I received this note: “Rob, I am a broker in Missouri. Last week there was a lot of news about UWM. All I try to do is help my clients. Why should I care about UWM’s earnings, or write downs on the value of their servicing, or losses on hedges?” Thank you for the note: see below for
Land Loan, Agentic AI Tools; Deep Dive Into Earnings; Pennymac's Spector on Servicing Value
Here in the hallways at the Western Secondary in L.A., there isn’t a lot of talk about GSE reform, although this short clip from Sam Valverde, ex-acting president of Ginnie Mae, revisits the subject: The GSE reform trigger nobody's watching closely enough. More of the talk is about 2nd quarter earnings, and I received this note: “Rob, I am a broker in Missouri. Last week there was a lot of news about UWM. All I try to do is help my clients. Why should I care about UWM’s earnings, or write downs on the value of their servicing, or losses on hedges?” Thank you for the note: see below for
10th August, 26
Another Week, Another Oil Price Pivot
Recent experience suggests the safest assumption about oil prices and bond yields is that they will pop and drop with reasonable regularity. In other words, lower prices/yields for a few days following friendly war-related headlines tend to give way to unfriendly headlines and a market reversal. Wash, rinse, repeat. The new week is starting off with unfriendly news and higher oil/yields. There's not much sense in attempting to dig any deeper on market analysis so far today
Another Week, Another Oil Price Pivot
Recent experience suggests the safest assumption about oil prices and bond yields is that they will pop and drop with reasonable regularity. In other words, lower prices/yields for a few days following friendly war-related headlines tend to give way to unfriendly headlines and a market reversal. Wash, rinse, repeat. The new week is starting off with unfriendly news and higher oil/yields. There's not much sense in attempting to dig any deeper on market analysis so far today