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MBS RECAP: Summertime Monday in November

November 19,2019
by admin

There’s something special (and especially frustrating) about certain summertime Mondays. This is true not only because you might have been doing something fun on the weekend and are loathe to return to work, but also because financial markets can exemplify those same sorts of feelings. Things are moving slower and with less enthusiasm than we might expect on a typical day. In many cases, those summertime Mondays almost feel like an unofficial 3rd day of the weekend.

The other time of the year where such days begin creeping back in is during the winter holiday season. And I’m going to declare today as the first such day. Granted, this probably has almost everything to do with the fact that the news cycle is preoccupied with the impeachment hearings, and very little to do with the time of year, but markets aren’t very interested in that news. So to market participants, it just feels dead out there.

The absence of volume and liquidity helped grease the skids for a modest rally this morning (i.e. when fewer traders are in the room, each trader represents a higher percentage of the overall market and can thus effect reactions that are bigger than they typically would be). There was at least one trade-related headline just before the noon hour, but it was only really traded by Twitter-reading algorithms. Stocks and bonds quickly returned to the morning’s previous trend and fizzled sideways for the rest of the day.

Training, Marketing, Broker Products; Stocks, Bonds, and Rates

November 18,2019
by admin

A pass rate of 51% on July’s California bar exam may not seem like cause for celebration, but it’s the first time in six years that a majority of people who took the July test passed. If the majority of people think that there will be a U.S. recession in 2020, will it be a self-fulfilling prophesy? We’re a long way away from negative GDP, especially two straight readings of it. (More on the economy in capital markets below.) In other money matters, the lawsuits and penalties just don’t stop, the latest involving Paul Mangione, an ex-Deutsche Bank exec who must pony up $500k for his role in “misrepresenting the characteristics of the loans backing the two securities and misleading potential investors about the loan origination practices of Deutsche Bank’s wholly-owned subsidiary…”

Lender Products and Services

Looking for a quick read to inspire your borrower experience improvements for 2020? Check out Maxwell’s recent blog: “7 Ways to Improve Your Borrower Experience for Profitable Growth & Competitive Differentiation.” Recommended for all lending managers and professionals, this quick read will give you the ideas and confidence to start improving your process today.

Home Point Financial’s independent research indicates that brokers recapture only 14% of their customers. Big lenders who prey on broker client lists can recapture up to 70%. What’s causing that gap? Chief Business Officer Phil Shoemaker shares his reasoning, and a potential solution, in this video. That’s not all they have on tap over on YouTube; here’s a video you can use to explain escrow to your borrowers! Just another example of how Customer For Life can make a difference. Don’t wait to partner with Home Point Financial.

Take charge of next year’s production and profitability numbers by getting the book Conquering Shiftsinto the hands of all of your originators. Companies who incorporate the principles and techniques discussed are seeing phenomenal results. Building and executing a plan does not happen on a whim. It takes thought, intention and execution. That is exactly how the individuals interviewed in this book became and continue to remain successful. Some soared during double-digit interest rates; for others, amazing achievement happened during the Great Recession of 2007-2008. “I’ve endorsed this well-crafted book which is filled with inspiration and bullet proof tactics”, says Daniel Harkavy, CEO of Building Champions. For loan officers and senior management looking to boost production Conquering shifts is a must read. Discount pricing ends today,November 19. I have indicated the value of reading this book in several posts. Have you bought your copies yet? If not, why not?

With less than 45 days left in the year, everyone is working diligently to finalize their 2020 plans. Is performance training part of your plan for greater success next year? If it’s not, it should be. What you do in January sets the stage for elevated production throughout the year, and XINNIX, The Mortgage Academy, is ready to help you exceed industry averages. Based on an 18-month scorecard released this quarter, XINNIX graduates are outperforming the industry average in any market. Download your free copy of the report here. Don’t get left behind in the new year. Visit the XINNIX website or schedule a call with a XINNIX Account Executive today to see how The XINNIX System of Training, Accountability, and Coaching can jumpstart your salesforce into an incredible 2020!

M&A and Joint Ventures

Nothing stops mergers and acquisitions. The latest example is United Bankshares, Inc. and Carolina Financial Corporation (owner of Crescom Bank, owner of Crescent Mortgage Co.) announcing a merger in the Southeast and Mid-Atlantic regions creating a $25 billion entitiy.

NewRez LLC announced the formation of a new joint venture mortgage company to be added to its network of partners. NewRez and Shelter Mortgage Company, L.L.C., the NewRez business division focused on JV lending, have partnered in this venture with Landed, Inc., a company based in San Francisco with down payment support and homebuyer education programs aimed at helping teachers and school employees afford to buy homes.

Capital Markets

The U.S. economy is still expanding, but data on retail sales and industrial production shows growth has fallen since earlier this year. Bank, manufacturer and oil-producer stocks have driven stock market gains in recent months, while safe sectors have underperformed, showing money managers think the economy is slowing but a recession is not imminent. Positive data and the return of a normal yield curve are among reassurances, but a Bank of America survey finds more than a third of fund managers think the US-Chinese trade dispute is the biggest threat to markets. Stock prices have been hitting record highs and investors no longer see an imminent recession, but economic indicators point to slowing growth.

People think they know where rates are headed, but in truth, nobody does with certainty where or when. What we do know is that news, whether it is political, geo-political, or economic, impacts interest rates as much as anything else. Mortgage rates move with investors buying or selling fixed rate financial instruments (e.g. bonds or long-term mortgages). Interest rates and bond prices move inversely, as more selling of MBS causes prices to drop and pushes mortgage rates up, and vice versa. Historically, if equity markets are rising in price, fixed rate investments are dropping in price because investors sell their fixed rate investments to purchase the equities. The opposite is also true, if investors are selling equities, they will generally take the sale proceeds and purchase fixed rate investments. News that creates more value for equities will cause buying interest in equities and the prices of equities to increase. Before equities become overpriced, this reduces demand for bonds and MBS at their current rate levels, reducing rates to a point where these instruments become attractive investments again. At some point the rates of return on the long-term fixed investments become high enough, therefore the prices low enough, that investors will start to return to these investments, slowing rate increases and potentially reversing the trend. And equities usually respond well to positive news and negatively to bad news, meaning rates go up with good news (e.g. the economy is humming) and go down with bad news (e.g. China just announced retaliatory tariffs). All this should come as no surprise that LOs are rooting for “bad” news so that rates will decrease and they can lock in their borrowers at lower rates.

Any interesting news to start the week? Well, despite President Trump being relentlessly critical of Fed Chair Jerome Powell’s monetary policies, the pair met for a sit-down yesterday. The Fed said Powell “did not discuss his expectations for monetary policy, except to stress that the path of policy will depend entirely on incoming information that bears on the outlook for the economy.” Trump tweeted that the pair discussed “negative interest” among other topics. U.S. Treasuries did not pay much attention to that news, but instead rallied on the back of a report that Chinese officials have a pessimistic view of the ongoing negotiations with the U.S. due to President Trump’s reluctance to roll back import tariffs. The 10-year closed the day -3 bps to 1.81 percent amid the geopolitical uncertainty. Also regarding China, the People’s Bank of China lowered its reverse repurchase rate by five basis points to 2.50 percent, and the U.S. Department of Commerce extended a temporary license that allows U.S. companies to continue selling components to Huawei.

In the mortgage sector, there was a Class A FedTrade operation, with the NY Fed accepting $1.598 billion out of a $1.604 billion max UMBS30 2.5 percent ($450 million) and 3.0 percent ($1.148 billion). Separately, the NAHB Housing Market Index for November declined for the first time in five months, though it remains higher by nearly 17 percent versus a year ago. And, the FHFA announced that it was extending its December 19, 2019 deadline to January 21, 2020 on its Request for Input on the GSEs’ pooling practices. Today’s calendar is light with only the October Housing Starts and Building Permits couplet – hardly market moving. Additionally, markets will receive remarks from New York Fed President Williams later this morning. (As I send this the bond market hasn’t begun trading yet.)

Companies Hiring

Valuation Partners, a leading nationwide appraisal management company is expanding its sales force. The AMC is having a record year, has been in business for over 35 years and has a best of class reputation. Valuation Partners is looking for a Vice President of National Sales for Equity Valuation. The ideal candidate will have experience working in the Consumer lending space or correspondent channel focused on banks and credit unions. Responsibilities include representing the firm regarding customized valuation solutions that support Home Equity and related second mortgage products. Professionalism and a commitment to a strong work ethic are a must. Experience in high end sales efforts is desirable. Resumes can be confidentially submitted to

Congrats to Ray Brousseau who has joined River City Mortgage as Partner and EVP of Strategy and Expansion! (read the entire press release). Management is committed to adding talented MLOs and is actively hiring, Inside, Outside and Work from Home LOs! Notes Managing Partner and COO Nick Hunter, “We’re excited about the expansion in both our hometown and coast to coast from Oregon to Maine!” “Our success is due to making people our #1 priority. When this becomes more than just words, when it becomes a practice, good things happen. Relationships are built. Ray Brousseau understands this commitment and we’re all ecstatic to have him as part of our team.” Loan volume is anticipated to reach nearly $1 billion in 2020. Parties interested in learning more about River City Mortgage should contact Ray or attend a GoToMeeting being hosted by Nick Hunter and Ray Brousseau on Friday, Nov. 22 at 11AM-12PM ET; Dial in: +1 (408) 650-3123; Access Code: 178-568-085.

Attention mortgage professionals! Selecting the right company in the financial industry doesn’t have to be based on a game of chance. The NewRez Family of Companies offers the right candidates multiple reasons to strategically map their career paths with confidence. Join us at our open house tomorrow, Wednesday November 20th from 5 PM to 8 PM at our Fort Washington, PA headquarters.Click here to view all our current open positions. If you are unable to attend the open house and are interested in learning more about openings within NewRez, please contact

National lender Sierra Pacific Mortgage recently announced the launch of its new mobile app. Powered by the industry-recognized mobile application developer Simple Nexus LLC, the Sierra Pacific Mortgage app features an encrypted platform that provides seamless, secure communications and updates to loan officers, borrowers and REALTOR® associates. Borrowers can apply for home financing in 20 minutes or less after downloading the Sierra Pacific Mortgage app. Paperwork’s thankfully kept to a minimum, as users can photograph and upload their support documents. The app also delivers accurate client status updates and milestones to borrowers, their Sierra Pacific loan officer and REALTOR® with a single click, keeping everyone up to date. And when they have a question, borrowers can contact their Sierra Pacific loan officer through the app’s built-in Instant Messaging. Want to learn more? Download the Sierra Pacific Mortgage app to your to your Android or iPhone or visit Sierra Pacific’s blog.

Dallas’ Gateway First Bank announced that Tony Taveekanjana is joining the organization as EVP and Chief Production Officer, subject to regulatory approval, to oversee all retail and correspondent mortgage production across the country.

Landlords Helping the Economy for First Time in Nearly 2 Years

November 18,2019
by admin

Fannie Mae’s economists are predicting that economic growth will slow significantly in the fourth quarter to 1.6 percent. This downward revision however is not as dire as it sounds. The company’s October forecast was looking for 1.7 percent growth in the third quarter due to an inventory drawdown from the General Motors strike and general weakness in the manufacturing sector. Instead, the third quarter growth in the real gross domestic product (GDP) came in at 1.9 percent. They now see that expected inventory drawdown materializing in this current quarter and that GDP for the year will be 2.1 percent.

The simulative effects of the Budget Act of 2019, improved business investment and continued strength in consumer spending along with a temporary reprieve from trade tensions have moved Fannie Mae’s Economic and Strategic Research (ESR) Group to increase their full-year 2020 GDP forecast from 1.7 percent to 1.9 percent. Downside risks include trade volatility, weakness in the manufacturing sector and global uncertainty, specifically the Brexit-driven elections in the United Kingdom and political turmoil in Hong Kong and South America.

Residential fixed investment grew by an annualized 5.1 percent in the third quarter, making a positive contribution to the economy for the first time in seven quarters. The growth came through stronger residential construction, home improvements, and brokers’ fees. The ESR Group says it expects this momentum to continue at a more moderate 3.3 percent pace as construction activity and sales remain healthy. Housing market activity however will continue to be constrained by lack of homes for sale.

Sales of existing homes fell in September, as was to be expected after two months of strong growth. Even with a 2.2 percent decline, the annualized rate of 5.38 million units during the month helped third quarter existing home sales to rise to the highest level since the first quarter of 2018. Pending sales rose to a new 2019 high in September so sales are expected to increase in the short term.

The ESR Group predicts that, in the longer term, even as low mortgages rates and strong employment provide a supportive environment, existing home sales may be nearing a plateau. The current sales pace is near a range that they believe to be consistent with recent historic age-adjusted homeowner migration patterns, so they do not expect to see additional “catch-up” migration as happened earlier this decade. This is a partial reason why the availability of existing homes for sale continues to decline, limiting the potential for further growth. These inventory constrains also continue to hold back household formations. Consistent with this view, purchase mortgage applications, while volatile in recent months, appear to be leveling off, and the Fannie Mae Home Purchase Sentiment Index (HPSI) has pulled back modestly over the past two months as fewer respondents believe that the available inventory makes this a good time to buy.

Also new home sales pulled back slightly in September, they have also been improving. For the third quarter the sales pace averaged 691,000 annualized units, the fastest pace since the recession. The Census Bureau’s Housing Vacancy and Homeownership Survey reflected this increase in new home sales, with the nationwide homeownership rate rebounding in the third quarter to 64.8 percent after declining during the first two quarters of the year.

Single-family construction is looking more encouraging. There were 901,000 annualized starts during the third quarter, also the highest of the expansion, and permits rose in September for the fifth consecutive month. The Housing Market Index published by the National Association of Home Builders measured an improvement in homebuilder sentiment, increasing in October for the fourth consecutive month to the highest level since February 2018. Nevertheless, a lack of both labor and lots remain a barrier and starts are not growing adequately to match sales. Much of the recent strength in new single-family home sales has come from inventories that accumulated during last year’s sales slowdown. That buildup is near depletion and the inventory is now back within its historical norm. The economists expect sales to level off until the supply of new homes gradually catches up and that regional differences in market activity will reflect relative supply constraints. New home sales are likely to continue trending upward in the South while remaining subdued in much of the West and Northeast.

As sales have increased, annual home price appreciation has firmed up following a year of deceleration. While it remains relatively subdued compared to recent years, increasing price growth will dampen recent affordability gains driven by the lower mortgage rate environment.

Mortgage rates have stabilized recently after falling for ten straight months. Freddie Mac’s average 30-year fixed mortgage rate rose 8 basis points to 3.69 percent in October, though it remained over a full percentage point below year-ago levels. While mortgage rates are not expected to increase significantly in coming quarters, stabilizing rates will not provide the same support for home purchases that declining rates offered.

Multifamily housing starts fell 28 percent in September, wiping out much of August’s 41 percent surge and were down 6.9 percent for the third quarter as a whole. These starts tend to be volatile, however, and multifamily permits over the past two months have been among the highest readings since the past recession. Multifamily construction should remain strong in response to continued low vacancy rates, renter household formation, and low interest rates.

The brighter outlook for home sales led Fannie Mae to increase its forecast for purchase mortgage originations in 2019 and 2020 to $1.29 trillion and $1.30 trillion, respectively. Total originations for 2019 are expected to rise 16.6 percent from 2018 to $2.06 trillion. Looking ahead to 2020, they expect a decline in refinance activity and essentially flat purchase activity to bring down total originations by 9.2 percent to $1.87 trillion, with the refinance share dropping from 37 percent in 2019 to 31 percent in 2020.

2020 Proposed Bylaws Changes

November 18,2019
by admin

The Houston Association of REALTORS® Board of Directors has approved changes to the HAR Bylaws. These Bylaws changes, if approved, shall be effective January 1, 2020. Please note the underlined sections are proposed additions to the Bylaws while the crossed-out phrases are proposed deletions.

The Annual Member Meeting to act on these Bylaws changes will be held on December 16, 2019 in the HAR Board Room, 3693 Southwest Freeway. All members are invited to attend. If you are unable to attend, you may sign and return the proxy form to the HAR office by noon, December 12, 2019. The proxy grants the 2019 Chair the right to cast your vote in your absence.

Click HERE to download the Proxy Form.

Source: Houston Association of REALTORS®

MBS Day Ahead: Thanksgiving Week Trading Themes Trying to Show Up Early

November 18,2019
by admin

Daily and overnight trading volumes have been declining, and intraday trading ranges have been getting more narrow. The starting point for that trend was the day after November 7th (when all the news hit about tariff roll-backs seemingly being in the bag for the US/China trade deal). By the beginning of the following week (last week), we had the White House saying no rollback had been agreed to. At the same time, bonds were working through the 2nd biggest week of corporate bond issuance of the year and breathing a sigh of relief as Powell did no harm during his congressional testimony. A mid-week Trump speech also lacked any of the trade deal optimism that has been a constant enemy of low rates.

In short, there was a big blow-up for yields 2 weeks ago and then multiple reasons to recover last week. But rather than accelerate back toward the center of the previous range, bond momentum waned and volumes continued to decline. This is somewhat reminiscent of movement typically seen this time of year where bond traders increasingly tune out heading into Thanksgiving. The only issue is that Thanksgiving doesn’t happen until next week.

20191119 open

The extent to which bonds tend to consolidate heading into thanksgiving is borderline uncanny. When it comes to market movement, few things can be expected with better than 50/50 probability, but this is certainly one of them. There are notable exceptions, however, and one in particular that I won’t ever forget. It was 2012 and the first time I’d attempted to work somewhere other than my own office in the history of MBS Live. My extended family was excited to finally get to spend some time with me (at least that’s what they said!) because up until then, I’d generally been unavailable on weekdays during the holidays. After all, markets are still technically open.

I figured I’d be able to jump into the makeshift office in the back room of my folks’ house on the gloomy Oregon coast, check in with markets, then get back to family festivities while keeping an eye out for any significant market movement via the MBS Live mobile site. As it turns out, they didn’t get to see much of me, because bonds decided to blow up (relatively) for no apparent reason. Then, as now, the week before saw an obvious consolidation with lower volume and volatility. The chart below has the 4 trading days of Thanksgiving week in the white box.

20191119 open

In hindsight, this turned out to be a random move motivated primarily by light volume and light liquidity on a holiday week. In the current case, we’re about 3-4 days early to that type of early consolidation seen in 2012, and 6-7 days early for the typical Thanksgiving consolidation.

What does it all mean? The big takeaway for me is that we want to take upcoming market action with a grain of salt and carefully consider if the motivations match the movement. With limited motivations on tap yesterday and today, that examination is yielding logical results so far, but I have a feelings we’ll soon be needing to make sense of another pre-Thanksgiving bout of volatility. Hopefully it goes in the other direction this time.

Building Permits Surge to 12-Year High

November 18,2019
by admin

All three of the residential construction measures tracked by the U.S. Census Bureau and the Department of Housing and Urban Development roared back in October after posting terrible numbers in September. Construction permits and housing starts moved significantly higher and completions, although driven largely by the multi-family sector, were especially strong.

Housing permits were issued at a seasonally adjusted annual rate of 1,461,000 units, up 5.0 percent from the revised September rate of 1,391,000. The revision was a slight upgrade from the 1,387,000 units originally reported which had marked a 2.7 percent decline from August. The October permitting rate was 14.1 percent higher than the 1,281,000-unit pace in October 2018, and the highest reading since 2007.

The permitting number was well above any of the analysts’ predictions reported by Econoday. Those ranged from 1,262,000 to 1,360,000 with a consensus of 1,320,000 units.

Single-family permits were issued at a seasonally adjusted rate of 909,000, a 3.2 percent increase from September and 7.4 percent higher than the rate a year earlier. September’s permitting rate was revised from 882,000 down to 881,000 units, Multi-family permits increased by 6.1 percent and 27.5 percent from the two earlier periods to 505,000 annual units.

On a non-adjusted basis there were 131,800 permits issued during the month compared to 114,900 in September. Single-family permits numbered 79,600, up from 70,700.

For the year-to-date (YTD) there have been 1,149,900 permits issued compared to 1,123,200 for the same period in 2018. Of those, 726,900 were for single-family and 387,700 were for multifamily units compared to 738,200 and 353,100 last year.

Housing starts rose 3.8 percent from September to 1,314,000 units on a seasonally adjusted basis. The previous month’s estimate of 1,256,000 starts in September, a drop of 9.4 percent, was revised up to 1,266,000. Starts are now up 8.5 percent higher than the 1,211,000-unit pace in September 2018.

Despite the strong number, starts fell short of the Econoday forecast range of 1,336,000 to 1,400,000 units. The consensus of analysts polled was 1,378,000.

Single-family starts rise 2.0 percent from the September estimate of 918,000 to 936,000 units. This was an 8.2 percent year-over-year gain. Multifamily starts increased by 6.8 percent and 10.7 percent from the earlier periods to 362,000 units.

The unadjusted estimate for starts was 113.100 units, down slightly from 113,400 units the prior month. Single-family starts were also lower, 79,400 compared to 80,100.

YTD there have been 1,076,700 residential units started 755,000 of which were single family houses and 311,100 were units in building of five units or more. The comparable numbers for the same period in 2018 were a total of 1,082,700, 764,700 single family, and 306,500 multifamily units.

The annual rate of completion rose 10.3 percent from September’s rate of 1,139,000 units to 1,256,000 units and was 12.4 percent higher than the rate in October 2018. Single family completions were at a seasonally adjusted rate of 897,000 units, up 4.5 percent from September and 8.6 percent higher year-over-year. Multifamily completions surged 27.3 percent and 25.5 percent from the two earlier periods to a rate of 354,000.

On an unadjusted basis there were 112,000 units completed during the month, 81,400 of which were single-family homes. The numbers in September were 97,400 and 73,100 respectively.

Through the end of September there have been 1,029,600 residential units brought online compared to 993,400 through September of last year. Single family units accounted for 734,600 of the total, up from 698,400. Multifamily completions were virtually unchanged year-over-year at 287,500.

At the end of the reporting period there were 1,161,000 residential units under construction, 527,000 of them single-family houses. In addition, there were 181,000 permits outstanding with 83,000 of them for single-family units.

Permits rose by 19.5 percent in the Northeast and were 9.3 percent higher on an annual basis. Starts however, dropped by 21.9 percent and were 1.1 percent lower than in October 2018. Completions jumped by 16.3 percent and 31.5 percent.

In the Midwest there was an increase of 1.7 percent in permits compared to September but 5.9 percent fewer than a year earlier. Starts rose 8.7 percent for the month but fell by 6.4 percent from the previous October. The rate of completions rose 3.4 percent from the prior month but were down 14.5 percent on an annual basis.

The South posted a 5.6 percent month-over-month gain in permits issued and they surged 20.5 percent on an annual basis. There was a 0.7 percent increase in housing starts for the month, pushing them up 15.6 percent on an annual basis. Completions gained 3.5 percent and 13.7 percent compared to earlier numbers.

Permits edged up 0.8 percent in the West but were 14.6 percent higher year-over-year. Starts rose 17.6 percent and 6.8 percent from the two earlier periods. Builders completed 25.8 percent more units in October than in September, and 20.3 percent more than a year earlier.

Lowest Mortgage Rates in 2 Weeks

November 17,2019
by admin

Mortgage rates added to last week’s improvement with another modest drop today. That brings the average lender to the best levels in exactly 2 weeks–a welcome change after hitting the highest levels in more than 3 months on Friday November 8th.

US/China trade relations have been a key source of volatility, but markets are also eager to see how economic data unfolds as 2019 draws to a close. The combination of a phase 1 US/China trade deal and reasonably resilient economic data could push rates much higher and confirm a rising rate trend for the next several months. Conversely, if the trade deal looks shaky and if economic data deteriorates, rates could take another run at the long-term lows seen in early September.

This isn’t a narrative that will play out today, tomorrow, or even any time this week. It will take time for the next crop of economic data to arrive and even then, it would have to be much stronger or weaker than expected in order to have a big impact on rates. As for the trade deal, there’s no reason to expect any firm conclusion until after Thanksgiving.

All of the above leaves us with plenty of volatility in the meantime, but in a narrow range relative to the bigger picture.

Today’s Most Prevalent Rates For Top Tier Scenarios

  • 30YR FIXED -3.75-3.875%
  • FHA/VA – 3.375%
  • 15 YEAR FIXED – 3.375%
  • 5 YEAR ARMS – 3.25-3.75% depending on the lender

Ongoing Lock/Float Considerations

  • 2019 has been the best year for mortgage rates since 2011. Big, long-lasting improvements such as this one are increasingly susceptible to bounces/corrections

  • Fed policy and the US/China trade war have been key players. Major updates on either front could cause a volatile reaction in rates

  • The Fed and the bond market (which dictates rates) will be watching economic data closely, both at home and abroad, as well as trade war updates. The stronger the data and trade relations, the more rates could rise, while weaker data and trade wars will lead to new long-term lows.
  • Rates discussed refer to the most frequently-quoted, conforming, conventional 30yr fixed rate for top tier borrowers among average to well-priced lenders. The rates generally assume little-to-no origination or discount except as noted when applicable. Rates appearing on this page are “effective rates” that take day-to-day changes in upfront costs into consideration.

MBS RECAP: Small Victory as Broader Battle Continues

November 17,2019
by admin

As 2019 winds down, investors have never been so broadly certain about the overall market thesis. Unfortunately, that thesis calls for unavoidable uncertainty and the inability to clear it up very quickly. Reason being: we need to see if global economic data is going to reverse course and make improvements. We also need to see how the US/China trade negotiations will evolve.

Trade is so important because investors are viewing it as one of the most time advance indicators imaginable. In other words, if a trade deal happens, it may not be fully reflected in the economic data for several months. Trickle down effects could take years. Granted, a deal will probably happen, but the details and the timeline remain intentionally mysterious. That’s one of the key reasons markets seem to put too much faith in every little trade headline as a potential market mover.

Indeed, that was today’s key event as a CNBC reporter said Chinese officials were frustrated about Trump denying the plan to roll back tariffs. The same report suggested China could wait for impeachment proceedings to finish or even for the next presidential election. Stocks and bond yields shot quickly lower on that news but gradually stabilized in the afternoon. Bonds ended the day with modest, but important gains (because they keep us well within the broader consolidation trend–i.e. basically living to fight another day).

The EDGE: Week Of November 18, 2019

November 17,2019
by admin

In This Week’s “The EDGE”

  • HAR Recommendations for City of Houston Run-Off Election
  • VA Loans Surge Among Millennial Home Buyers
  • Hop Into the Driver’s Seat at HAR
  • What is Your Value?
  • Get On Top of Your Negotiation Game

Click the on the icon to download the presentation in .pdf (Acrobat)

PDF Download

Source: Houston Association of REALTORS®

Homebuilder Confidence Staying Near Long-Term Highs

November 17,2019
by admin

Home builder confidence fell back slightly this month, declining by 1 point to 70 in the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). The dip partially reversed the index’s 3-point jump in October which had carried it to its highest reading since February 2018.

Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and their expectations for sales over the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

The HMI index gauging current sales conditions fell two points to 76 and the measure charting traffic of prospective buyers dropped one point to 53. The component measuring sales expectations in the next six months rose one point to 77.

NAHB says single-family builders are currently reporting ongoing positive conditions, spurred in part by low mortgage rates and continued job growth. In a further sign of solid demand, this is the fourth consecutive month where at least half of all builders surveyed have reported positive buyer traffic conditions. The buyer traffic component of the survey has consistently lagged the other two components since well before the housing crisis, often by more than 20 points.

There has been substantial year-over-year improvement following the housing affordability crunch of late 2018, when the HMI stood at 60, NHBA says. “However, lot shortages remain a serious problem, particularly among custom builders. Builders also continue to grapple with other affordability headwinds, including a lack of labor and regulatory constraints.”

Looking at the three-month moving averages for regional HMI scores, the Northeast posted a 2-point gain to 62, the West was up 3 points to 81 and the South moved one 1 higher to 74. The Midwest was unchanged at 58.