Mortgage News

ac·qui·esce /ˌakwēˈes/ verb

1. accept something reluctantly but without protest.

The data indicates a consistent trend toward lower inflation, as shown by the CoreLogic Rental Index, which has decreased since the last report. However, this decline hasn’t yet been reflected in the latest Consumer Price Index (CPI).

If you’re an agent or lender, how do you address this with your clients? What narrative or guidance do you provide in this context?

For perspective, here’s a look at rates over the past year: Nationally, rates are now below 6.875%, which aligns with historical averages.

Rates fluctuate daily, sometimes even hourly, and focusing solely on timing the market for the best rate overlooks the broader picture.

Bonds are flat this morning which is good news. If NVIDIA took off it could have pressured the Bond market as NVIDIA is the largest component of the S&P 500.

*would have pulled more money away from the bond market

Job Data Revisions yet again. The Quarterly Census of Employment and Wages QCEW released their numbers and is showing more significant downward revisions in the labor market.

What does this mean? Basically the jobs growth has been over stated significantly. The challenge is the FED members keep stating how strong the labor market is.

Rates are flat so far this week.

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This was fascinating and highlights how much emotions and greed play a significant role in the stock market.

54% of the available global assets are in the Bond Market with 46% in the Stock Market –Data SIFMA. $140.7 trillion in Bond and $115 trillion in Stock Market.

Nvidia has emerged as a leader in the AI boom, with its stock prices soaring dramatically. Similar to the crypto market, these entities have become highly appealing to money managers, often drawing capital away from the bond market, which has consequently suffered.

Nvidia’s earnings report after the bell will reveal the next move for money managers. If they fall short of expectations, we may see a shift toward safer investments, such as the bond market.

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Producer Price Index was slightly hotter than expected. This is the cost of the producer to produce goods and services. A preamble to the Personal Consumption Expenditures (PCE) due out 27th of November.

Initial Jobless Claims are down for the first time as well as Continuing Claims.

The Bond Market is just not sure what to do with itself.

Rates increased the last two weeks and are not budging off those levels.

We will see how this all shakes out the next two months.

Check out this graph—it’s so detailed you’ll need a microscope just to find the title!

Mortgage rates have taken a beating in recent weeks, so this bit of good news—or at least no bad news—is welcome.

The October Consumer Price Index (CPI) report showed overall inflation rose by 0.24%, with the annual rate ticking up slightly from 2.4% to 2.6%. Two main factors driving this increase were a surprising 2.7% rise in used car prices and, as expected for the holiday season, higher airline fares.

Meanwhile, mortgage applications dropped 6.8% as rates climbed to an average of 6.84%. However, purchase applications specifically rose by 1%, which is encouraging news.

We do soft credit pulls for mortgage pre approvals.

The bond market, particularly mortgage-backed securities, has been on a wild ride over the past three weeks.

Take a look at the graph below: remember, an upward movement indicates lower rates. We’ve seen significant losses since September, and while there was a bit of a rebound last week, most of those gains slipped away this morning.

This chart represents about a 0.75% rate shift.

The economy, meanwhile, continues to perform exceptionally well, with unemployment holding at historic lows and inflation hovering close to the Fed’s target. Yet, mortgage rates remain stubbornly unpredictable.

ADP Employment Report was double the expectations. It is seasonally adjusted but much higher than anyone expected.

Friday is tech BLS Report will have more detail and actual numbers.

Small Businesses with fewer than 50 employees are not seeing job growth. which is better than the decline the last four months.

GDP Q3 shows economy grew by 2.8%, we expected 3.0%. PCE numbers tomorrow.

Lots of acronyms today sorry about that, trying to keep this post short and sweet. Bottom line is the bond market is confused and the election is next week.

Next two days will dictate the direction of the market specifically the Bond market. My suggestion: Lock’em if the Got’em.

Art work by Brazilian cartoonist Henrique de Souza Filho

Understanding the Quit Rate and Economic Indicators

The quit rate is the rate at which employees voluntarily leave their jobs. When this rate remains low for an extended period, it often signals that fewer people feel confident about finding new employment opportunities.

The latest Job Openings and Labor Turnover Survey (JOLTS) showed that job openings fell by 557,000, 7% below the anticipated 8 million. This aligns with the low quit rate, indicating a potential cooling in labor market confidence.

In other economic news, oil prices have dropped to $67 per barrel. This decline is beneficial for inflation, as oil is a key input in both manufacturing and transportation.

Despite these developments, the bond market has shown strong reactions over the past two weeks, pushing interest rates to their highest level since July. This may seem counterintuitive given recent economic data, yet bond markets are influenced by complex factors, including inflation expectations and Federal Reserve policy.

Finally, the Conference Board’s Consumer Confidence report showed a rise from 99.2 to 108.7, the highest level since January, signaling improved consumer sentiment.

What’s interesting about Durable Goods Orders, yes I guess I just said that but seriously it’s a thing.

Durable Goods are items with a lifespan of over three years—think of dishwashers, ovens, stoves, and cars. Interestingly, there’s been a shift in demand since the pandemic, with many people investing in home remodels and repairs. The trend is clear in the graph below.

Part of the inflationary pressure we’re seeing is due to demand outpacing supply, shown by the red line in the chart.

In September, durable Goods Orders declined by 0.8%, largely because of slower auto sales. However, when excluding autos, core durable goods orders actually rose by 0.5%.

In short, despite the constant stream of negative news, the economy is still moving forward.

Next week its all about Jobs reports and our infamous Personal Consumption Expenditures (PCE).

Mortgage Rates are starting to take back some of the losses over the last week. We feel good about the direction and anticipate lower rates moving forward.

“It feels like we’re just running in place,
More homes for sale, yet stuck in the race.
Rates in the sixes, a welcome descent,
Better than last year’s eight percent.

But still we stand, no forward pace,
Caught in a cycle, in the same space.
The numbers shift, but the story’s the same,
Chasing a change that never quite came.“

At 2:00pm ET the Federal Reserve will release their Beige Book. Think of it as an economic health update on each of the twelve districts.

This gives us an insight of what the Fed members are thinking beyond the BLS Jobs report. They will check on the strength against their business contacts and what they are saying.