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It’s a confusing time to be a homeowner. Rates are up, and everyone has an opinion on what will happen next. It’s easy to get sucked into social media rabbit … Continue Reading How To Navigate Three Common Mortgage Scenarios

8/14/2023 7:47:24 AM

I’ve always believed that owning a home is something to be proud of. Something to strive for. Most people used to agree with me – but more and more I … Continue Reading What Happened to Pride in Home Ownership?

8/10/2023 7:58:00 AM

You’ve probably heard me say this before: it’s never a good idea to time the market. But there are moments in time where if you’re looking, it might be better … Continue Reading Looking To Buy? Now Might Be the Right Time

6/26/2023 7:19:59 AM

It’s tough to get a mortgage these days. New and existing clients have been calling non-stop letting me know that they’ve been turned down by their bank. It’s upsetting – … Continue Reading You Don’t Need a Big Bank to Get a Mortgage

6/13/2023 7:20:30 AM

Some not-so-great news from the Bank of Canada yesterday: the target rate was raised yet again by 0.25%. This one wasn’t a complete surprise. Rates have been climbing for the … Continue Reading The Bank of Canada Does It Again

6/8/2023 6:53:49 AM

Parents are helping their adult children buy homes now more than any other time in history. It makes sense: housing is unaffordable, so why wouldn’t baby boomer parents help lighten … Continue Reading Multigenerational Housing: What We Can Learn From the Old Country

5/16/2023 6:37:00 AM

It’s not everyday you get to sit on a video call with someone who used to run our country’s central bank. So when I was invited to be a part … Continue Reading Exclusive Insights From a Former Bank of Canada Governor

5/14/2023 8:47:07 AM

Mortgage News Daily

In a rather classic pattern, a hawkish read on the Fed gave way to international selling on Thursday.  From there, a token correction was slightly more likely in the absence of any big ticket economic data, and that's what we're seeing so far today.  In the AM hours, it's been modest, to say the least.  Current 10yr trading levels are still worst than they were on Wednesday afternoon, but MBS and shorter-term Treasuries.

9/22/2023 11:17:06 AM

Sometimes I send this Commentary out from some pretty nice places, sometimes not. Today comes from the tarmac at the Newark Airport, in Row 22, sitting next to some hairy guy who’s snoring and apparently went with the “Garlic Lover’s Pizza” last night. You can decide which category today fits in. “What do you call a small pepper in the autumn? A little chili.” Tomorrow is the fall equinox. Autumn? Autumnal? Different ways of saying similar things? Do you know the difference between a loan, a mortgage, a lien, a note, and a deed of trust? There are differences, just like there are differences in the reasons why people move. Unlike the convicted felon that I spent some time with yesterday, wanting a newer, better, or larger house or apartment has been the most common specific reason cited for moves over the past two years. That's followed by establishing one’s own household, evidenced by a change in marital status becoming a more common reason for moving in 2022 than in 2021. The percentage of movers reporting housing unit upgrades declined, suggesting a reversal of a boom in housing demand that happened in 2020, early in the COVID-19 pandemic. A quarter of movers reported family-related reasons for their move, the second most often-cited general reason for moving in 2022 and in several recent years. (Today’s podcast can be found here and this week’s is sponsored by the Trade-In Mortgage powered by Calque. Homeowners can buy before they sell, make non-contingent offers, and tap their home equity to fund the down payment on their next home. Lenders can help their clients negotiate a lower purchase price, reduce their interest payments, and eliminate PMI. Hear an interview with Mayer Brown LLP’s Lauren B. Pryor on M&A activity in the mortgage space and what makes for a successful transaction in the current environment.)

9/22/2023 8:59:15 AM

Rates moved only moderately higher on Wednesday after the Fed rocked the bond market with its updated rate forecasts.  To reiterate yesterday's analysis, it's not that the market is expecting the Fed to be accurate in those forecasts.  Rather, the forecasts help investors understand how the Fed's approach will be calibrated going forward. In simpler terms, the Fed doesn't think rates are too high right now.  If anything, they might need to go higher.  Moreover, they won't go lower until economic data really starts to deteriorate in a compelling way.  Unfortunately, this morning's most relevant economic report didn't deteriorate at all (weekly jobless claims were 201k versus a median forecast of 225k).  Actually, it's fortunate for the economy, but unfortunate for interest rates.   Between the data and the overnight momentum in overseas markets, bonds are at their weakest levels in years.  Mortgage-backed securities (the bonds that dictate mortgage rates) didn't swoon quite as much as Treasuries, but as of today, it was just enough to push the average mortgage lender almost perfectly back in line with the highest 30yr fixed rate of the past 23 years. 

9/21/2023 3:09:00 PM

New Yield Highs After Post-Fed Follow-Through and Econ Data Any time the market goes to sleep on a Fed day in the midst of a big move, there's a stronger than average possibility that overseas markets will add some momentum in the prevailing direction.  That direction is "UP!" as far as rates and yields are concerned.  The overseas FOMO selling brought yields to new long term highs overnight and a big beat in Jobless Claims made for another few bps of selling.  After that, bonds managed to level off fairly well, but they may have benefited from the acceleration in stock selling. Econ Data / Events Jobless Claims 201k vs 225k f'cast, 221k prev Philly Fed -13.5 vs -0.7 f'cast, 12 prev Philly Fed Prices 25.7 vs 20.8 prev Market Movement Recap 08:34 AM Much weaker overnight with additional selling after data.  10s up 8bps at 4.478.  MBS down almost half a point.  12:52 PM Calm trading since 9am with MBS down 7 ticks (.22) and 10yr up 7bps at 4.47%. 03:29 PM Some illiquidity weighing on MBS but still generally flat.  6.0 coupons down roughly a quarter point.  10s up 7.9bps at 4.478

9/21/2023 3:07:01 PM

Wednesday was a confirmation of a hawkish Fed that won't care about the economy until it sees actual damage, and even then, only if that damage coincides with the expected drop in inflation.  More important than Powell's message during the press conference was the takeaway from the Fed's dot plot.  The market was positioned for this, but subsequent trading suggests "not positioned enough."  Domestic traders began shifting their selling focus away from the shortest end of the yield curve this morning.  This is their way of acquiescing to the idea that the Fed will attempt to keep rates high for as long as possible (or as long as it takes for inflation to come back to target levels).  Now for the plot twist: virtually all of the first paragraph was copied and pasted from last September's post-Fed Thursday (here's the link to the original).  Pretty spooky... In the present day example, we have the same sort of international follow-through in the overnight session following a "higher for longer" nudge from the Fed, but we also have stronger jobless claims data and a higher inflation reading inside the Philly Fed data (of the two, the labor market data is the bigger mover).  Comparing the present example to the big picture, we find similarities and differences.  In both cases, the Fed day reaction represented a technical breakout of a recently achieved high yield: But the 2022 bond market was in a much greater state of flux.  The yield curve had only recently inverted and 2s had been selling off faster and faster compared to 10s.  Contrast that to 2023 where 2s have been far more sideways compared to 10s.  While it can take months, the stabilization of a curve inversion trend is another step toward an eventual rate reversal.   The scary caveat is that some past examples show multiple head fakes back toward an un-inverted curve before it finally takes.  The following chart shows those head fakes (note, this is 10s vs 1s as opposed to 10s vs 2s, due to better historical data availability in 1yr Treasuries). 

9/21/2023 11:27:34 AM

Who can think of September 21st without thinking about Earth, Wind, and Fire? Yesterday I was on a United Airlines flight out of San Francisco to Savannah, in Row 14. There was no row 13… but I knew what row I was really in! Speaking of numbers, obvious or otherwise, this article caught my eye: The Average American Spends This Much on a Mortgage.” Credit unions and banks have obviously seen their residential lending volume drop but are usually able to move personnel to other departments within the company rather than lay them off. Figuring out how to increase business is a big topic, and Black homeownership is being discussed. For some perspective I turned to the St. Louis Fed with its extensive library of graphs. In fact, if you want to look at the opportunity for growth, look no further than the disparity in homeownership between White, Black, Asian, and Hispanic populations. (Today’s podcast can be found here and this week’s is sponsored by the Trade-In Mortgage powered by Calque. Homeowners can buy before they sell, make non-contingent offers, and tap their home equity to fund the down payment on their next home. Lenders can help their clients negotiate a lower purchase price, reduce their interest payments, and eliminate PMI. Hear an interview with Planet Home’s James de Palma on the current servicing market and trends in asset management.) Lender and Broker Software, Programs, and Services More than 40 million people will resume making federal student loan payments in October following a three-year pause. The resumption of payments will drive up DTI for many prospective homebuyers, compounding current affordability challenges. With monthly payments for bachelor’s degree holders averaging $267, and master’s degree holders averaging $567, how do you plan on helping people with student loan debt make their dreams of homeownership come true? Join Catalina Kaiyoorawongs of LoanSense and Dave Savage of TrustEngine at 2 pm ET today for an ACUMA Inside Track webinar on loan strategies and federal programs that can help homebuyers with federal student loans. Register now to save your seat.

9/21/2023 9:10:11 AM

The Fed did not hike its policy rate today, but it did release updated forecasts that showed the average Fed member expects rates to be half a percent higher at the end of 2024 and 2025 compared to their forecasts released in June. The market was expecting a higher average forecast, but not that high.  The result was broad bond market weakness.  While that weakness was concentrated in the shortest-term bonds, longer-term rates (like those for mortgages) also took a hit. The inspiration for that weakness should not be confused with the Fed announcement itself or the press conference with Fed Chair Powell afterward.  As always, there are many comments that can be singled out as having an impact, but the only truly new and surprising news was in the updated forecasts. Notably, these forecasts can be wildly inaccurate.  The Fed knows this.  The market knows it.  But the market is only relying on the forecasts to measure the Fed's attitude toward its rate-setting policy--not to accurately predict actual rate levels.  Bottom line: the Fed continues choosing to talk tough on the rate outlook and the market has no choice but to comply.  This will only change when the economic data looks gloomy enough to soften the Fed's stance. In context, today's mortgage rate increase wasn't extreme.  In fact, the day began in slightly better territory and only went higher after lenders changed rates in the afternoon.  Versus yesterday afternoon, the change is minimal in the bigger picture.  We're still not back to the long term highs seen at the end of August. 

9/20/2023 3:50:00 PM

Higher For Longer Today's Fed announcement was largely as expected: no rate hike, "data dependent," and "higher for longer" communicated via the dots.  The direction of the change in the dot plot is no surprise, but the magnitude was.  The median Fed member moved their forecast up by 0.50% through both 2024 and 2025.  Granted, those forecasts have a poor track record of predicting the future, but they speak to the Fed's will to continue hiking if the data remains resilient. Bonds held their ground reasonably well at first, but late day position squaring resulted in a break to new long term yield highs.  Econ Data / Events Fed Dot Plot Changes  2023 5.625% (range 5.375% to 5.625%); prior 5.625% 2024  5.125% (range 4.375% to 6.125%); prior 4.625 2025  3.875% (range 2.625% to 5.625%); prior 3.375% 2026  2.875% (range 2.375% to 4.875%) Market Movement Recap 09:24 AM gradually but modestly stronger throughout the overnight session.  MBS up 6 ticks (.19). 10yr down 3.4bps at 4.329. 01:24 PM 10yr down 4.6bps, near best levels at 4.317.  MBS up 6 ticks (.19) again after some AM volatility. 02:05 PM Sharply weaker after Fed announcement.  MBS down 3 ticks (.09) and 10yr up to 4.359 03:22 PM Volatile 2-way trading since Fed.  Powell press conference is over.  MBS down 7 ticks during moments of illiquidity (-0.22) but only 1-2 ticks otherwise (0.03-0.06).  10yr down 1bp on the day at 4.353. 04:41 PM Weakest levels of the day.  MBS down 9 ticks (.28) and 10yr up 3.4bps at 4.397.

9/20/2023 3:43:51 PM

Recent indicators suggest that economic activity has been expanding at a moderate solid pace. Job gains have been robust slowed in recent months, months but remain strong, and the unemployment rate has remained low. Inflation remains elevated. The U.S. banking system is sound and resilient. Tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain. The Committee remains highly attentive to inflation risks. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to raise maintain the target range for the federal funds rate to 5-1/4 to 5-1/2 percent. The Committee will continue to assess additional information and its implications for monetary policy. In determining the extent of additional policy firming that may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to returning inflation to its 2 percent objective. Recent indicators suggest that economic activity has been expanding at a moderate pace. Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated. The U.S. banking system is sound and resilient. Tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain. The Committee remains highly attentive to inflation risks. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to raise the target range for the federal funds rate to 5-1/4 to 5-1/2 percent. The Committee will continue to assess additional information and its implications for monetary policy. In determining the extent of additional policy firming that may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to returning inflation to its 2 percent objective. In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals. The Committee’s assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.

9/20/2023 1:01:59 PM

Learning how to make a big deal out of every Fed day is a requirement for passing the market commentary test.  But the often-overlooked extra credit can be earned in an elective: "How to be smugly dismissive about the potential impact of a Fed d...

9/20/2023 10:53:06 AM