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Up-to-Date Mortgage News

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Canadian economist Benjamin Tal’s presentation at the National Mortgage Brokers Conference was eye-opening. In it, he posited a holistic view of what’s happening with the Canadian economy and what we … Continue Reading Insights From A Top Canadian Economist: Part 2

11/4/2022 8:12:02 AM

Two weeks ago, I attended the National Mortgage Brokers Conference and had the pleasure of seeing one of the most trusted economists in the country speak: Benjamin Tal. Ben is … Continue Reading Insights From A Top Canadian Economist: Part 1

11/1/2022 2:42:45 PM

Tomorrow will be the 7th rate announcement from the Bank of Canada this year. Of the last 6 announcements, 5 have resulted in rate hikes. Big rate hikes. Rate hikes … Continue Reading Warning: More Rate Hikes To Come

10/25/2022 6:57:18 AM

Rumour has it the worst is yet to come. On October 26th, Bank of Canada Governor Tiff Macklem will very likely increase rates by another 0.50%. Not only will this … Continue Reading How To Navigate Today’s Economy

10/17/2022 7:35:29 AM

The Bank of Canada has always avoided forecasting rate hikes and rate cuts. It’s always been a closely guarded secret left to speculation – that is, of course, until July … Continue Reading A Broken Promise Leads To A Broken Economy

10/9/2022 9:50:36 AM

It’s no secret to anyone reading this: rate hikes have gone off the rails. On September 7th, the Bank of Canada announced yet another whopping increase of 0.75% leaving economists … Continue Reading The 3 Questions I Get Asked Most About Rising Rates

9/15/2022 7:38:28 AM

For millions of Canadians, the Bank of Canada meetings are a major cause of anxiety. Will rates go up? By how much? Will I continue to be able to meet … Continue Reading When Will Variable Rates Stop Climbing?

8/15/2022 7:44:45 AM

Mortgage News Daily

Bonds Ultimately Shrug Off Stronger Jobs Data Today saw a fairly impressive round trip for rates following the stronger-than-expected jobs report.  The initial reaction was clear and unsurprising.  NFP (and especially wages... recently mentioned by Powell) came out higher and rates immediately jumped.  Stocks also tanked on the news because both sides of the market were trading the Fed outlook. After the initial convulsion, bonds gathered their composure and began the long slog back to unchanged levels by the 3pm CME close.  Today's video discusses a few ways to rationalize that, but ultimately, we would not feel the need to rationalize anything if bonds had ended slightly weaker.  Econ Data / Events Nonfarm Payrolls 263k vs 200k f'cast, 284k prev Wages 0.6 vs 0.3 f'cast, 0.5 prev Unemployment rate 3.7 vs 3.7 f'cast/prev Market Movement Recap 08:53 AM Sharply weaker after the NFP with a bit of a bounce now.  10yr still up 6.7bps at 3.576.  MBS down roughly 5/8ths of a point. 12:31 PM Decent recovery into the PM hours.  MBS down less than 3/8ths now which is roughly a half point above the AM lows.  10yr yields up only 5bps at 3.56 after being as high as 3.64 earlier. 02:34 PM Almost all the way back to unchanged levels now, both in Treasuries and MBS.  10yr up only 1bp on the day at 3.521.  MBS down only 3 ticks (.09).  04:10 PM All the way back into positive territory and then some, albeit after hours at this point.  10yr down 2.8bps at 3.482.  MBS up just over an eighth of a point.

12/2/2022 3:12:59 PM

As far as financial markets are concerned, a green Christmas is better than anything Bing Crosby could have crooned about. Green is the color that flashes when markets are improving or when interest rates are falling. Green, for lack of a better word, is good. For mortgage rates, it's been an especially difficult year.  They've risen at the fastest pace in 40 years to levels not seen for 20 years.  They've gotten their hopes up a few times only to have them crushed more and more convincingly.   Despite being downtrodden, market participants knew that the bad times couldn't last forever.  The higher rates went, the closer they were to the peak--even if that peak ended up being quite a bit higher than most anyone imagined earlier in the year.   To understand why rates went as high as they did and why there's renewed hope for a reversal, we need to remember that inflation has been the driving force.  Every time inflation surprised to the upside, rates ratcheted abruptly higher. Most recently though, inflation surprised to the downside when the most recent Consumer Price Index (CPI) data came out on November 10th.  The result was the single best day for mortgage rates on record (in terms of day-over-day movement).  This isn't the first time for such a surprise, but it's the most compelling.  It sets the stage for the next CPI report to confirm a big picture shift in the inflation narrative. 

12/2/2022 2:48:00 PM

Change has been in the air since the November 10th CPI data.  That single report did more than any other event to raise hopes for a big picture shift in 2022's rate narrative.  Then 2 days ago, Fed Chair Powell confirmed the thoughts shared by other Fed speakers in the past few weeks.  Specifically, the Fed is now at the point of slowing the pace of rate hikes and settling on a "terminal" (aka "ceiling") Fed Funds Rate--one that it will attempt to hold as long as possible.  In order for the shifty narrative to play out, not only does inflation need to continue to moderate, but the labor market also needs to avoid sending stronger signals.  Unfortunately for bonds, today's signals were anything but weak. True to form, both sides of the market stuck to the familiar trading pattern that merely asks "what's this data mean for Fed policy?"  We've referred to this in the past as the "Fed accommodation trade," but labels aren't important.  The function is quite clear: stronger jobs data is bad for both stocks and bonds--at least as far as the initial reaction to the headlines are concerned.  How can we be sure of the implications for Fed policy?  There's no way to unequivocally confirm it, but the market securities concerned with betting on the path of the Fed Funds Rate sure seem to be convinced. And let's not forget Powell's comment from Wednesday: FED'S POWELL: INITIAL SURGE OF INFLATION NOT RELATED TO WAGES, BUT WAGES ARE GOING TO BE IMPORTANT GOING FORWARD along with the fact that wage growth came in at 0.6 vs 0.3 this morning and was revised up another 0.1 for last month. Finally, let's not forget that today's weakness is a drop in the bucket in the big picture.  In fact, it's downright hard to see the 4 pixels of red line representing today's selling in the following chart:

12/2/2022 11:30:46 AM

Robert K. writes, “My Mom always said, ‘Work until your bank account looks like a phone number. Well, I did it! ‘Available balance: $911.’” Speaking of numbers, thank you to those who wrote to me correcting the GDP of Mexico here as being $1.4 trillion and not $1.4 billion. Numbers certainly tell the story with vendors and lenders. Owners of vendors and third-party providers are looking at middle layers of management, cutting back, certainly cutting salaries, or ridding themselves of unproductive salespeople. Lenders continue to cut staff (Wells Fargo being the latest example) or furlough employees for a portion of their workweeks and implementing salary cuts. Meanwhile, managers report that end-of-year reviews are resulting in employees asking for raises due to inflation. On a lager scale, uh, larger scale, mergers and acquisitions continue. The latest to cross the tape is that "Guild Mortgage is excited to announce the acquisition of Inlanta." (STRATMOR acted as the advisor.) (Today’s podcast is available here and this week’s is sponsored by Candor Technology: Home of the One Touch Underwrite, supporting lenders from Point of Sale to Post Close QC, to reduce repurchase risk, increase underwriter productivity by 400 percent, and decrease turn-times by 10.) Lender and Broker Software and Services “How is your profitability by loan officer? How is your profitability by branch? By region? If you want the answers to these questions, Richey May’s RM Analyze business intelligence can give you that visibility. Our platform is designed and implemented by mortgage industry experts to quickly set you up with the critical reports you need to run your business. We understand that having visibility into your profitability at all levels enables you to make powerful decisions that help your business succeed. If you don’t have the data at your fingertips that tells you how you’re performing in real time, you may not be able to act quickly enough in this fluid market. It’s time for you to get a deeper look at your business. Contact the RM Analyze experts to learn more.”

12/2/2022 9:13:08 AM

Mortgage rates had been in a holding pattern for nearly 3 weeks following the November 10th CPI inflation data.  On that single day, the average 30yr fixed rate fell by a record amount (as far as day-over-day record keeping is concerned, and we don't have daily records prior to 2009).  That took rates from the low 7s to the mid 6's in a matter of hours and there they've stayed until this morning. The timing of today's improvement depends on the lender in question to some extent.  Several lenders offered fairly aggressive improvements yesterday.  This was in response to a well-received speech from Fed Chair Powell and stronger than expected bond buying as a part of the month-end trading process (bond buying is good for rates, all other things being equal).  Those friendly events happened late enough in the day that the average lender wasn't able to adjust their rates accordingly until this morning. All that needed to happen was for the bond market to hold relatively steady overnight.  It did.  The result is easily the best day of improvement since November 10th, and one of the better days of 2022.  The average borrower would be seeing rates that are 0.25% lower versus yesterday morning at the average lender (i.e. 6.5% is now 6.25%). Friday brings the important Employment Situation (the official jobs report from the Department of Labor).  The Fed is primarily focused on inflation, but labor market data is a not-too-distant second.  If job creation comes in weaker--especially if wage growth decreases--the Fed will increasingly conclude it has less room to be aggressive in its fight against inflation without doing serious damage to the economy.  All other things being equal, that would make for another good day for rates. 

12/1/2022 3:05:57 PM

Bonds Look Like They're Expecting Good News We came into the day with a disclaimer about modest losses still constituting a victory due to Wednesday afternoon's big rally.  That was only relevant for a few moments this morning as the rest of the day has been spent moving to even stronger levels.  The day's economic data and events can't really be credited for offering much motivation.  Bonds simply look like they're getting in position for friendly data or are otherwise generally ready to turn the big corner barring an unfriendly surprise in the data. Econ Data / Events Jobless Claims  225k vs 235k f'cast, 241k prev Core PCE Price Index m/m 0.2 vs 0.3 f'cast, 0.5 prev Core PCE Prices y/y 5.0 vs 5.0 f'cast, 5.2 prev ISM Manufacturing 49.0 vs 49.8 f'cast, 50.2 prev Market Movement Recap 09:18 AM Modestly stronger overnight with 2-way trading surrounding the 8:30am econ data.  10yr down 1.8bps at 3.592 and MBS roughly unchanged. 10:32 AM Slightly weaker through 9:45am.  Choppy and sideways since then.  10yr up less than 1bp at 3.618.  MBS down just over an eighth of a point.  11:44 AM Nice little rally starting in earnest at 11am.  MBS now up 3 ticks (.09) on the day to the best levels of the day.  10yr down 3.3bps at 3.578, nearly at the lows. 02:08 PM Off the best levels by about an eighth but still an eighth of a point higher on the day in MBS.  10yr yield is down almost 6bps at 3.552%.

12/1/2022 2:15:46 PM

Our industry continues to be battered. Starwood Capital-backed Reverse Mortgage Funding and its parent company Reverse Mortgage Investment Trust have filed for bankruptcy. Inlanta Mortgage told the state of Wisconsin it plans to wind down its business. Switching gears, to celebrate the first day of December, spend 5 minutes taking one of my favorite quizzes, focused on figuring out where you’re from based on the words you use for certain common things. (What do you call the little bug that rolls up into a ball when you touch it? Sneakers versus tennis shoes? Y’all versus you guys?) It’s uncanny! What isn’t uncanny are the number of predictions we’ve heard about a recession, many dating from nearly a year ago. Recessions generally mean lower rates. Bank of America CEO Brian Moynihan says that a "mild recession" is likely next year but that concerns about a more severe downturn appear to be abating, noting households have maintained strong financial footing. "At the end of the day, the consumer has held in well," Moynihan says. "The consumer has stayed reasonably strong because they're employed." And Brian, how ‘bout the almost $30 trillion in home equity out there? (Today’s podcast is available here and this week’s is sponsored by Candor Technology: Home of the One Touch Underwrite, supporting lenders from Point of Sale to Post Close QC, to reduce repurchase risk, increase underwriter productivity by 400 percent, and decrease turn-times by 10. Listen to an interview with MBA’s Marina Walsh highlighting MBA’s latest National Delinquency Survey, as well as additional research.)

12/1/2022 9:24:55 AM

Mortgage rates moved slightly lower today, but barring a major market reversal overnight, could be even lower tomorrow.  It's fairly rare to be able to say such things when it comes to mortgage rates, but the reasons are fairly logical in this case.  Rates are based on movement in the bond market.  Mortgage lenders don't like to change rates any more than they have to on any given day.  If the market moves in a big way right at the end of the day, many lenders will simply wait until the following morning to update their rates.  Spoiler alert: bonds moved in a fairly big way right at the end of the trading day today!  The first phase of the move was already underway in response to a speech from Fed Chair Powell who confirmed a likely slowdown in the pace of Fed rate hikes in coming meetings.  Powell also commented on the possibility that inflation would be showing a long-awaited shift in the coming months. Beyond that, it is the last day of the month and that creates more urgent trading needs.  Some traders may have been waiting to buy bonds (which helps rates move lower, all other things being equal) until they heard what Powell had to say.  Others were obviously waiting until the last minute.   By the end of the day, bonds had put in their best performance since the epic rally on November 10th (in response to the cooler inflation data via the CPI report).   Many mortgage lenders made friendly adjustments to rates mid-afternoon, but as of right now, only a few have responded to the second wave of gains.  Those who don't are likely to respond in tomorrow morning's initial rate offerings.  Lenders who already responded may also feel even better if this afternoon's bond market strength is confirmed with steady overnight trading.

11/30/2022 3:40:42 PM

Powell Shows Up With Holiday Cheer For Bonds While it's not technically a holiday week, we are in the midst of the winter holiday season for the bond market.  And while it's the holidays at the end of December that are typically associated with spreading cheer, Fed Chair Powell figured he'd get an early start.  Powell didn't offer any new concepts for those who'd been paying attention to other Fed speakers, but markets nonetheless took heart in confirmation from the boss.  Month-end trading added to the gains at 4pm making for a full point round trip in MBS prices. Econ Data / Events ADP Employment  127k vs 200k f'cast, 239k prev Q3 GDP Prelim (1st Revision) 2.9 vs 2.7 f'cast, 2.6 prev higher consumer spending higher inflation adjustment higher biz investment Market Movement Recap 08:28 AM Sideways to slightly stronger in a narrow range overnight.  Modest positive reaction to ADP employment data.  10yr down 1.7bps at 3.735 and MBS up 2 ticks (.06). 08:37 AM losing ground after upward revision to GDP.  10yr now up 0.2 bps on the day at 3.752 and MBS down an eighth. 01:04 PM Additional weakness into mid-day.  No obvious motivations other than pre-Powell anxiety and curve flattening.  MBS down roughly a quarter and 10yr up 1.8bps at 3.768 01:43 PM Improving after Powell comments.  MBS down only an eighth.  10yr down 1.7bps at 3.733 03:18 PM Post Powell gains continued.  10yr down 5.2bps at 6.698 and MBS up 3/8ths of a point.

11/30/2022 3:25:58 PM

The combination of this morning's ADP employment data and the preliminary GDP revision pushed yields slightly higher after a flat overnight session.  We can also assume some degree of anxiety heading into the 1:30pm speech from Fed Chair Powell at the Brookings Institute.  In the bigger picture, a range of 3.68 to 3.84 continues to dominate the longer end of the yield curve with yields gradually rising inside that range so far this week. When it comes to the shorter end of the yield curve, the excess pressure is validated by Fed rate hike expectations.  Indeed this morning's data produced a noticeable bump in the outlook for Fed meetings beyond the next one (the next one is seen as a 0.50% lock for quite a while). In addition to the prospect of Powell addressing this outlook, it is also "month-end" for the market.  We have a primer that discusses the implications on MBS Live (here it is).

11/30/2022 12:13:05 PM