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Tag: #mortgagerates #mortgagenews # mortgage

Mortgage Applications Indicate Shift Toward First-Time Buyers

Mortgage application volume was lower over the last week, continuing the up-one-week, down-the-next pattern it has displayed since late June. The Mortgage Bankers Association (MBA) says its Market Composite Index, a measure of mortgage loan application volume, dropped 3.9 percent on a seasonally adjusted basis during the week ended August 13 and was 4 percent lower on an unadjusted basis. Most of the downturn was on the refinancing side of originations. The Refinance Index decreased 5 percent from the previous week and was 8 percent lower than the same week one year ago. The refinance share of mortgage activity accounted to 67.3 percent of total applications, down from 68.0 percent the previous week. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier and 2 percent before adjustment. It was 19 percent lower than the same week in 2020.

 

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MBS RECAP: What’s Up With MBS Underperformance Today?

What’s Up With MBS Underperformance Today?

As long as we’re not dealing with big, obvious, unique market realities (i.e. financial crisis, QE3, Covid and the aftermath), MBS do a pretty great job of moving the same direction as US Treasuries and by roughly the same amount.  Today was not one of those days, at least if we’re looking for 10yr yields to set the tone.  Our first clue is seen in the 5yr sector, where Treasuries are negative on the day.  In…

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Mixed Messages in New Home Purchase Application Data

Mortgage applications for the purchase of newly built homes fell sharply in July, but the Mortgage Bankers Association (MBA) said it expects new home sales for the month will remain strong. MBA’s Builder Application Survey (BAS) recorded a 27.4 percent decline in applications compared to July 2020 data. Applications were down 4 percent from June 2021. The numbers are not seasonally adjusted.

Based on the survey data and other assumptions, MBA estimates that new single-family home sales during the month were at a seasonally adjusted annual rate of 779,000 units. This is an increase of 10.7 percent from the previous month’s annual rate of 704,000 units. On an unadjusted basis, there were an estimated 64,000 home sold during the month, down from 66,000 in June.

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Mortgage Rates Struggle to Stay at Recent Lows

Mortgage rates experienced an uptick in volatility last week as the broader bond market was hit with a big dose of new supply.  In other words, between a set of scheduled Treasury auctions and a surge in corporate bond issuance, there were lots of new bonds looking for buyers.  More supply means bonds have to offer higher yields (aka “rates”) in order to attract buyers.  Mortgage rates moved higher as a result, but only in the first half of the week.

Once the market worked through the supply, renewed covid fears and geopolitical risks combined to tip the scales back in favor of bond buyers (investors often seek out bonds as a safe haven amid uncertainty and/or economic weakness).  More buyers mean lower rates, all other things being equal.  The good times kept rolling up until Monday morning.  The bond market has leveled off since then, but is doing a fairly good job holding in this lower range.

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Builder Confidence Falls to 13 Month Low

Fears about construction costs, supply shortages, and concern over fast rising home prices acted to deflate builder confidence this month. The National Association of Home Builders (NAHB) says the NAHB/Wells Fargo Housing Market Index (HMI), a measure of its new home builders’ sentiment about the market for newly constructed homes, fell 5 points this month to 75, the lowest it has been since June 2020. “While the demographics and interest for home buying remain solid, higher costs and material access issues have resulted in lower levels of home building and even put a hold on some ‘new home sales,” said NAHB Chief Economist Robert Dietz. “While these supply-side limitations are holding back the market, our expectation is that production bottlenecks should ease over the coming months and the market should return to more normal conditions.

 

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Rent Gains are Setting Records Too

While home prices have been posting record increases for months, it appears that rents are trying to keep up. CoreLogic says the connection is clear. The company’s Single-Family Rent Index, which analyzes single-family rent price changes nationally and across major metropolitan areas, shows rent growth in June was the highest since at least 2005, an annual gain of 7.5 percent. The increase in June 2020 was 1.4 percent. The company examines the path of single-family rents across four price tiers, and in each, the growth exceeded pre-pandemic rates for the third straight month. In the lower-priced tier of homes, those that rent for up to 75 percent of the regional median, rents increased 5.3 percent in June compared to 2.3 percent a year earlier. The lower-middle tier, with rents from 75 to 100 percent of the median, saw an annual increase of 6.4 percent against only 1.5 percent in June 2020. Higher-middle priced rents, those in the 100 to 125 percent bracket, were up 7.1 percent, up from 1.5 percent the prior June. In the higher-priced tier, those single-families with rents more than 125 percent of the median, rents jumped 9.6 percent. The gain in June 2020 was 1.2 percent.

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MBS Day Ahead: Fun-Size Sell-Off Despite Weaker Data

The Retail Sales report is generally considered to be in the upper echelon of economic reports when it comes to bond market impact.  As such, it’s somewhat surprising to see bonds reacting negatively to a weaker-than-expected number.  But traders have their reasons.  These include a few bigger trades from bigger firms who were expecting an even weaker result in the data.  In turn, those trades provided leadership for more impressionable market participants.  They also helped yields crest the 1.25% technical level, thus resulting in some additional upward…

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MBS RECAP: Drifty Day, Treasuries Hold Weekly Gains, MBS Underperform.

Drifty Day, Treasuries Hold Weekly Gains, MBS Underperform.

With a strong move last Friday, the bond market was able to end the week at slightly stronger levels than those seen at the end of the previous week.  This is more readily seen on the Treasury side of the market where yields were under 1.26% at the 3pm CME close versus roughly 1.30 on Friday afternoon.  MBS underperformed, ultimately returning to ‘unchanged’ levels in the 4pm hour even as Treasuries…

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MBS Week Ahead: Still Anyone’s Game as Covid Concerns Continue

Just when you thought rates were bouncing higher after hitting 6 month lows, the new week begins with bonds re-staking a claim to the recent, stronger range in July/Aug. 10yr yields are back in the 1.2’s, and MBS are at the best levels in more than a week.

Most everyone is tired of pandemic-related news, but it continues to be the key source of motivation for the economy and the bond market whether directly or indirectly.  The Fed’s rate-friendly policy stance is another manifestation of covid’s economic impacts.  And just when the Fed is finally getting close to dialing back…

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Rates Recover After Bumpy Week; Realtors See Prices Moderating

Mortgage rates bounced at 6 month lows early last week and moved higher at a faster-than-normal pace through the middle of this week. They’ve been slow to recover, but Friday went a long way toward solidifying the short-term ceiling.

Economic data inspired the move on Friday with Consumer Sentiment falling to the lowest levels since 2011, just edging out the lows seen at the start of the pandemic. 

The University of Michigan, which has conducted the survey for decades, called out the “stunning loss of confidence” as being distorted by consumers’ emotional response to the resurgence of the pandemic, ultimately concluding “consumers will again voice more reasonable expectations” in the coming months.

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