“Blimps are one of the only forms of advertisement people are actually excited to see.” “Rob, we see all kinds of companies advertising at conferences. We are trying to lower our cost per loan, and I am doing a more formal review of third-party providers. I am wondering if there is a list of vendors who focus on certain areas out there?” Yup: a very good place to start is The Marketplace. Page down to look at the categories. (If your company isn’t on there yet, contact Jake Perkins.) Advertising is a piece of marketing, and on today’s Now Next Later (at 1PM ET) Jeremy Potter and Bri Lees, advisor to mortgage leaders, take a deep dive into the state of marketing and sales in mortgage and explore the differences between B2B and B2C strategies, where the industry is succeeding, where it needs to pivot, and the innovative marketing approaches mortgage has yet to tap into. Some will say that there are still too many lenders, too many LOs, and too many vendors. “If you get the deal, it will be with low margins.” (Today’s podcast can be found here and this week’s are sponsored by Lenders One. Lenders One is dedicated to helping independent mortgage bankers, banks and credit unions reduce costs, improve profitability, and operate competitively in the mortgage industry and within their communities. Hear an interview with C2 Financial’s David Temko on the upcoming National Home Affordability Counseling Day, where mortgage brokers across America will give free one-on-one credit counseling to create a path to homeownership.)
Bonds are under pressure yet again at the start of the new week--insult added to injury coming off of the worst week of selling since the late October Fed announcement. On that note, some of the recent weakness could be the bond market's way of bracing for another unfriendly impact from the Fed. There's also the need to make room for Treasury auctions during a less liquid time of year as well as a relatively important JOLTS release on Tuesday morning. Either way, 10yr yields are stretching the upper boundary of the medium term range.
Technicals Help Reconcile Selling Pressure
In the realm of market commentary, technicals are a vastly overused explanation for past movement, let alone for the prediction of future movement. In this week's case, however, the consolidation pattern in bond yields offers one of the only ways to understand the otherwise inexplicable selling pressure. Long story short, the weakness was just the right size and pace to complete the pattern heading into events with more power to inspire definitive reactions and lasting momentum.
Econ Data / Events
Consumer Sentiment (Dec)
53.3 vs 52 f'cast, 51.0 prev
Sentiment: 1y Inflation (Dec)
4.1% vs -- f'cast, 4.5% prev
Sentiment: 5y Inflation (Dec)
3.2% vs -- f'cast, 3.4% prev
U Mich conditions (Dec)
50.7 vs 51.3 f'cast, 51.1 prev
Core PCE (m/m) (Sep)
0.2% vs 0.2% f'cast, 0.2% prev
Core PCE Inflation (y/y) (Sep)
2.8% vs 2.9% f'cast, 2.9% prev
Inflation-Adjusted Spending (Consumption) (Sep)
0.3% vs 0.3% f'cast, 0.6% prev
Personal Income (Sep)
0.4% vs 0.3% f'cast, 0.4% prev
Market Movement Recap
09:29 AM Modestly weaker overnight but recovering a bit. MBS down 1 tick (.03) and 10yr up 1.2bps at 4.11
10:59 AM 10yr yields are up 3bps at 4.128. MBS are down only 3 ticks (.09) on the day.
12:20 PM MBS down an eighth and 10yr up 3.1bps at 4.129
Average mortgage rates drifted slightly higher to end the week, though they remained under the levels seen on Monday and Tuesday. Even then, none of this week's movement was especially abrupt. That's interesting considering there was a decent amount of economic data throughout the week. It could be that the rate market is simply waiting for the heavier hitting events on the horizon. Next Tuesday's Job Openings data is on the watch list. It will be the first major October employment data from the Bureau of Labor Statistics (the same agency that publishes the big jobs report) since the end of the government shutdown. That's especially notable in this case because we won't ever get a full jobs report for October, and the portion that remains won't come out until the following week. Then on Wednesday, the The Fed will announce its rate decision. Markets are fairly convinced the Fed will cut rates, but the confidence isn't as iron-clad as normal. Additional surprises could arrive with the Fed's dot plot (updated rate forecasts from each Fed members) as well as Fed Chair Powell's press conference. As always, keep in mind that a Fed rate cut has no bearing on longer-term rates like mortgages. It's actually been more common to see mortgage rates rise following Fed rate cuts.
Seasonally adjusted mortgage application activity edged 1.4% lower last week according to MBA’s Weekly Mortgage Applications Survey for the week ending November 28. Unadjusted applications were down sharply (33%) due to the holiday. The Refinance Index slipped 4% from the previous week but remains 109% higher than the same week one year ago—still a significant year-over-year improvement, even as borrowers appear to be waiting for lower rate levels before jumping in more aggressively. Purchase applications were more resilient, rising 3% seasonally adjusted. On an unadjusted basis, purchases fell 32% from the prior week (again largely driven by the holiday), but remain 17% above last year’s levels—a continued sign of underlying buyer demand supported by easing prices and gradually improving inventory conditions. The index is currently at the highest level since early 2023. “Mortgage rates moved lower in line with Treasury yields, which declined on data showing a weaker labor market and declining consumer confidence. The 30-year fixed mortgage rate declined to 6.32 percent after steadily increasing over the past month,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “After adjusting for the impact of the Thanksgiving holiday, refinance activity decreased across both conventional and government loans, as borrowers held out for lower rates. Purchase applications were up slightly, but we continue to see mixed results each week as the broader economic outlook remains cloudy, even as cooling home-price growth and increasing for-sale inventory bring some buyers back into the market.”
Watching Rates
Check our some recent articles and posts about current rates.
Average mortgage rates drifted slightly higher to end the week, though they remained under the levels seen on Monday and Tuesday. Even then, none of this week's movement was especially abrupt. That's interesting considering there was a decent amount of economic data throughout the week. It could be that the rate market is simply waiting for the heavier hitting events on the horizon. Next Tuesday's Job Openings data is on the watch list. It will be the first major October employment data from the Bureau of Labor Statistics (the same agency that publishes the big jobs report) since the end of the government shutdown. That's especially notable in this case because we won't ever get a full jobs report for October, and the portion that remains won't come out until the following week. Then on Wednesday, the The Fed will announce its rate decision. Markets are fairly convinced the Fed will cut rates, but the confidence isn't as iron-clad as normal. Additional surprises could arrive with the Fed's dot plot (updated rate forecasts from each Fed members) as well as Fed Chair Powell's press conference. As always, keep in mind that a Fed rate cut has no bearing on longer-term rates like mortgages. It's actually been more common to see mortgage rates rise following Fed rate cuts.
Today's mortgage rates a just a hair higher than yesterday's and although yesterday's rates were reasonably close to last Friday's, they were still definitely higher. That last assertion is at odds with some of the mortgage rate media coverage you may encounter today, but there's a logical reason. Freddie Mac releases its weekly mortgage rate survey every Thursday. It consists of an average of the rates from each of the previous 5 business days (Thursday through Wednesday). Thus, by the time it is reported, it is a fairly stale indication of rate movement if there's been any reasonable amount of volatility. In the case of the current week, Monday and Tuesday saw rates move meaningfully higher from last week. Even after yesterday's recovery, the average lender is still slightly higher than any day last week apart from Monday. As always, keep in mind that consistent daily coverage of mortgage rates mean that qualitative words like "higher and lower" may sound more serious than they are. For context, rates haven't drifted outside a 0.25% range for the past 3 months. Over the past 2 weeks, the range has been half that. [thirtyyearmortgagerates]
Mortgage rates improved more noticeably today, and while the average rate isn't quite as low as it was last week, it's fairly close. Rates are based on movement in the bond market. Bonds were most likely to move in response to one or both of today's big economic reports. Oddly enough, most of the bond market improvement was seen overnight, BEFORE the economic data came out. Nonetheless, the data definitely didn't hurt.
Unlike Monday, which saw a fairly brisk move toward higher rates, Tuesday barely budged. Additionally, the budging occurred in a friendly direction with the average lender offering rates that were just a hair lower than yesterday's. Starting tomorrow morning, this week's potential volatility will be higher. Each day brings several economic reports with the power to push rates higher or lower. Wednesday/tomorrow is probably chief among these due to the ADP employment report and a closely watched service sector report from ISM.
