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Builder Confidence is Good, But it Could be Better

Posted To: MND NewsWire

The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) moved one point higher this month. However, at 66, NAHB's measure of builder confidence in the new home market stayed within the 64 to 66 range where it has been now for four months. "While 30-year mortgage rates have dropped from 4.1 percent down to 3.6 percent during the past four months, we have not seen an equivalent higher pace of building activity because the rate declines occurred due to economic uncertainty stemming largely from growing trade concerns," said NAHB Chief Economist Robert Dietz. "Although affordability headwinds remain a challenge, demand is good and growing at lower price points and for smaller homes." The HMI is derived from a survey of its new home builder members that NAHB has conducted...(read more)

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08/16/2019 11:17 PM

New Home Sales Expected to Reflect Interest Rate Trend

Posted To: MND NewsWire

New home purchases are expected to be significantly higher in July according to data released by the Mortgage Bankers Association (MBA). Its monthly Builder Application Survey (BAS), indicates that applications for new home purchase mortgages increased by 11 percent month-over-month and were up 3.2 percent from July 2018. These estimates do not include any adjustment for typical seasonal patterns. "July's strong new home sales increase on a monthly and annual basis was driven by the ongoing decline in mortgage rates, combined with steady housing demand and a still-healthy job market," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "The average loan size decreased last month, likely influenced by the increase in the first-time homebuyer share, as these buyers...(read more)

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08/16/2019 11:15 PM

MBS RECAP: Relative Stability + Moderate Losses = MBS Fighting Back

Posted To: MBS Commentary

Perhaps more than any other day in the past few weeks, today stood as an example of the mortgage market's ability to put up a fight when the time is right. As we've discussed frequently, they've been getting pummeled by Treasuries as the latter's yields fell to new multi-year lows. MBS prices are at multi-year highs, to be fair, but in an underwhelming way compared to what's been going on in Treasuries. Our thesis was that the mortgage market needed TIME and STABILITY from the bond market, and it could work with one at a time if need be. If bonds could manage to weaken a bit, but not too much, that would be a bonus. Today, then, delivered on the the "stability" side of the equation with yields trading their narrowest range in more than 2 weeks and ticking that...(read more)

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08/16/2019 08:54 PM

Mortgage Rate Weirdness May Be Working in Your Favor Today

Posted To: Mortgage Rate Watch

Things have been weird enough for mortgage rates recently that we were forced to add a " Temporary Note on Mortgage Rate Inconsistency " to our daily coverage recently. It will likely return before too long, but with a few edits for clarity. Edits will also need to account for days like today, which offered a prime example of how the inconsistency can be corrected. There's a decent chance those first 3 sentences are confusing and/or relatively meaningless, so let's change that! Mortgage rates aren't the only rates out there. They exist in an ecosystem with more established players like US Treasury yields. They move so much like Treasury yields that even very smart people mistakenly believe Treasuries (specifically, the 10yr) dictate mortgage rates. Recently though, mortgage rates have moved...(read more)

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08/16/2019 07:22 PM

MBS Day Ahead: How Low Can We Go? And Why Mortgage Rates Can't...

Posted To: MBS Commentary

10yr yields rallied aggressively yesterday, and for no reason more compelling than a proverbial "snowball rally compounded by technicals and algorithmic trading." Ugh! I hate typing that stuff. It's annoying to be forced to reduce market movement to what feels like a "couldn't come up with anything better" type of explanation. We could also say that yesterday was the market's way of "giving up" after stocks were unable to sustain a bounce back from their rout on Wednesday. A surge lower in European bond yields didn't hurt either. If yields can so casually blast below 1.50%, it begs the question of how low we can go. The answer is complicated, to be sure. Certainly, we already know 10yr yields can go to 1.32%. They've done that before. We can...(read more)

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08/16/2019 03:28 PM

DPA, Non-QM Products; Deficits, Debt, The Yield Curve, and Mortgage Rates

Posted To: Pipeline Press

Some international rates have gone through 0 percent and are now negative. The low rates and high volumes have caused lenders to focus less on long-term planning and more on closing loans. Who can blame them? How would U.S. mortgage rates near 0 percent impact the future refi market for lenders? Here’s a piece worth a skim on why mortgage rates probably won’t hit 0% Mortgage Rates: Thinking the Unthinkable .” The yield on the 10-year Treasury note has fallen below the two-year yield for the first time since the financial crisis, causing a sell-off in the stock market. The 30-year yield is at an all-time low. An inverted yield curve has preceded every recession since 1950 by seven to 24 months. But former Federal Reserve Chair Janet Yellen says the latest inversion of the yield...(read more)

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08/16/2019 12:27 PM

MBS RECAP: Mortgage Market Starting to Play Like it Wants to Stay In The Game (Finally)

Posted To: MBS Commentary

Bonds digested the week's busiest day of economic data, by far, today. But markets in general are only interested in data that changes the economic narrative. Today's only real candidate in that regard would have been a surprisingly weak Retail Sales report. Since we didn't get that (it was stronger), bonds underwent a token sell-off and were quickly right back to paying attention to other things. Europe volunteered to be one of those "other things" today with talk of central bank stimulus from an ECB official. There were also a few blows traded in the trade war saga with China vowing "countermeasures" and Trump tweeting that any trade deal had to be on "our terms." No game changers there, but they certainly didn't hurt bonds. The afternoon saw...(read more)

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08/15/2019 09:35 PM