MBS RECAP: Boring Day For Bonds, But Tension Remains For Mortgages

Posted To: MBS Commentary

Boring Day For Bonds, But Tension Remains For Mortgages Rates continued reeling (depending on the lender) from the G-fee hike announced late Wednesday, but bonds managed to hold their ground (finally). This is the first decent push back against the recent technical breakout and the first real chance we have of defining an upper boundary for the current range. It's also the most optimistic view of such a ceiling. We'll know more about its chances next week. Econ Data / Events 20min of Fed 30yr UMBS Buying 10am, 1130am (M-F) and 1pm (T-Th) Retail Sales 1.2 vs 1.9 f'cast vs 8.4 prev Core Retail Sales 1.4 vs 0.8 f'cast , 5.6 prev Industrial Production 3.0 vs 3.0 f'cast, 5.7 prev Consumer Sentiment 72.8 vs 72.0 f'cast, 72.5 prev Market Movement Recap 08:15 AM Bonds were slightly…(read more)

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MBS RECAP: Boring Day For Bonds, But Tension Remains For Mortgages
MBS RECAP: Boring Day For Bonds, But Tension Remains For Mortgages

Mortgage Rates Are Not 1.99%. In Fact They're Back Over 3%

Posted To: Mortgage Rate Watch

Some mortgage companies have generated buzz by advertising 30yr fixed rates of 1.99%. While it is possible to obtain such a rate, there is definitely a catch. Rates are certainly low in the big picture. Up until this week, they were as low as they’ve ever been . The average lender was easily able to do a conventional 30yr fixed in the high 2% range for ideal scenarios. The situation has deteriorated fairly rapidly since then. More on that in a moment. For now, let’s pretend rates are still at all time lows, because even when that was the case, 1.99% still wasn’t what it appeared to be. The key concept that will help us understand why we could see 1.99% advertised when the average lender is almost a full percentage point higher is that of upfront costs vs interest rate. Fortunately, it’s pretty…(read more)

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Mortgage Rates Are Not 1.99%. In Fact They're Back Over 3%
Mortgage Rates Are Not 1.99%. In Fact They're Back Over 3%

MBS Day Ahead: Are Rates Ready To Be Done With This Correction?

Posted To: MBS Commentary

First thing's first, any conversation about rates in a mortgage market context would be incomplete without considering this week's regulatory drama. Specifically, FHFA just more than DOUBLED G-fees for refinances. Read all about it in the mega recap HERE . This surprise move threw lenders for a loop and most of them pulled pricing back significantly for obvious reasons. In other words, there was/is a disconnect between MBS movement and rate sheet changes and it could persist for another few days depending on the lender. Nonetheless, I'd generally expect that most of the disconnected movement between markets and rates would have happened yesterday. If the broader bond market is able to find a supportive ceiling for rates, the mortgage market should benefit from that as well. So is…(read more)

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MBS Day Ahead: Are Rates Ready To Be Done With This Correction?
MBS Day Ahead: Are Rates Ready To Be Done With This Correction?

Mortgage Rates Pummeled By Regulatory Drama

Posted To: Mortgage Rate Watch

At face value, the bonds that underlie the mortgage market didn’t sustain too much damage today. If there was nothing else to inspire lender rate changes, we might not be too much worse vs yesterday. Unfortunately, there is an absolutely massive source of motivation that unexpectedly burst on the scene last night. If you’re not already up to speed on it, READ THIS . As far as today is concerned, rates got torched . This is no surprise. Regulators just instantly doubled the fees they charge to provide guarantees for the mortgage market. Lenders will be forced to pay those fees on all loans that are already locked. Consumers will foot the bill for everything else. Strikingly, the pull-back from lenders is much bigger than the 0.5 points imposed by the GSEs because of the way the announcement…(read more)

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Mortgage Rates Pummeled By Regulatory Drama
Mortgage Rates Pummeled By Regulatory Drama

MBS RECAP: Mortgage Market Rocked by Instant Doubling of Regulatory Fees

Posted To: MBS Commentary

Mortgage Market Rocked by Instant Doubling of Regulatory Fees Consider this: the average guaranty fee (charged by Fannie/Freddie to ensure timely payments to investors), including upfront LLPAs and the ongoing fees built into monthly payments netted the agencies roughly 48bps in Q2. In one abrupt announcement last night, they added 50bps for refis, more than doubling their take. Purchases got caught in the crossfire. It's a big mess for the moment. The last 8 minutes of today's video talks all about it. Econ Data / Events 20min of Fed 30yr UMBS Buying 10am, 1130am (M-F) and 1pm (T-Th) Jobless Claims 963k vs 1.120m f'cast, 1.191m prev Market Movement Recap 08:19 AM Bonds were stronger at first in the overnight session, but Treasuries began losing ground after 5am ET. 10yr yields…(read more)

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MBS RECAP: Mortgage Market Rocked by Instant Doubling of Regulatory Fees
MBS RECAP: Mortgage Market Rocked by Instant Doubling of Regulatory Fees

MBS Day Ahead: Mega Recap of New Refi Fee and a Call to Action

Posted To: MBS Commentary

This began as my normal daily "day ahead" article, but as you can see based on the time of day and the following content, it turned into something else. Apologies for the break from the norm, but we have bigger fish to fry at the moment. Why? In a word: because of this . This has instantly created a very big mess in the mortgage market, and a ton of anger–justifiably so! For those that aren't going to click the link above or who don't really understand it, let's break it down in even shorter, simpler terms. The FHFA announced a new hit on all conventional refis (except certain construction-to-perm loans) effective for loans delivered to Fannie/Freddie on 9/1 or later. That applies to any conventional refi that isn't currently locked and that can't close before…(read more)

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MBS Day Ahead: Mega Recap of New Refi Fee and a Call to Action
MBS Day Ahead: Mega Recap of New Refi Fee and a Call to Action

FHFA Drops a Bomb; Your Refi Just Got Much More Expensive!

Posted To: Mortgage Rate Watch

In what can only be described as a cash grab, Fannie and Freddie’s regulator just announced a new tax on refinances. Granted, it’s not technically a tax, and it wasn’t probably even intended to hit the pocketbooks of the American homeowner, but that’s unfortunately exactly what it will do. Let’s break it down… What was announced? The FHFA, Fannie and Freddie’s regulator, is implementing a new price adjustment for all refinance transactions of 0.5% of the loan amount (i.e. $1500 on a $300k loan). This applies to loans delivered to Fannie/Freddie in September and thereafter, which is almost all of them that aren’t already well underway. Why?! They are saying it is due to economic and market uncertainty. Some might consider that to be a load of horse *** because this fee didn’t exist last week…(read more)

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FHFA Drops a Bomb; Your Refi Just Got Much More Expensive!
FHFA Drops a Bomb; Your Refi Just Got Much More Expensive!

Surprise Announcement From FHFA Just Made Your Refi Much More Expensive

Posted To: MBS Commentary

In what can only be described as a cash grab, Fannie and Freddie's regulator just announced a new tax on refinances. Granted, it's not technically a tax, and it wasn't probably even intended to hit the pocketbooks of the American homeowner, but that's unfortunately exactly what it will do. Let's break it down… What was announced? The FHFA, Fannie and Freddie's regulator, is implementing a new price adjustment for all refinance transactions of 0.5% of the loan amount (i.e. $1500 on a $300k loan). This applies to loans delivered to Fannie/Freddie in September and thereafter, which is almost all of them that aren't already well underway. Why?! They are saying it is due to economic and market uncertainty. Some might consider that to be a load of horse *** because this…(read more)

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Surprise Announcement From FHFA Just Made Your Refi Much More Expensive
Surprise Announcement From FHFA Just Made Your Refi Much More Expensive

Mortgage Rates Move Higher Again, And They Might Not Be Done

Posted To: Mortgage Rate Watch

Mortgage rates jumped yesterday at the fastest pace in more than 2 months. While that isn’t necessarily the end of the world when a 30yr fixed can still be had in the high 2% range, it wasn’t fun for those with loans in process. Today wasn’t great either. While the pace of upward movement slowed considerably, rates moved higher yet again today, bringing the average lender to the worst levels in almost exactly a month. While there’s never any way to know where rates will be at any given point in the future, we do know that this week represents a clear break from the trend seen during the previous 2 months. From early June through early August, mortgage rates moved lower at an incredibly calm and consistent pace, hitting multiple record lows in the process. Yesterday was the first major push…(read more)

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Mortgage Rates Move Higher Again, And They Might Not Be Done
Mortgage Rates Move Higher Again, And They Might Not Be Done

MBS RECAP: Why Are MBS Unchanged if Charts Don't Look That Way

Posted To: MBS Commentary

Bond Market Breakout is Here (The Bad One) For days–and especially since last Friday–we've been increasingly worried that the 2-month bond rally was running out of steam and at risk of a reversal. The jury was technically out until all of our overhead ceilings were taken out. As of today, they are. Econ Data / Events 20min of Fed 30yr UMBS Buying 10am, 1130am (M-F) and 1pm (T-Th) Core Consumer Prices (y/y) 1.6 vs 1.1 f'cast, 1.2 prev Market Movement Recap 08:23 AM Bonds were weaker overnight with most of the damage arriving with the European session and strength in equities markets (i.e. " risk-on " move). Weakness extending this morning with higher CPI not helping. 10yr up 4.6bps and UMBS 2.0 down a quarter point. 10:04 AM Modest recovery for bonds after bouncing off the…(read more)

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MBS RECAP: Why Are MBS Unchanged if Charts Don't Look That Way
MBS RECAP: Why Are MBS Unchanged if Charts Don't Look That Way