ALLIED EQUITY A Diversified Mortgage Company
400 North Mountain Ave., Suite 223, Upland, CA 91786
Phone  909-932-9226 Fax  909-803-9840

Mortgage Related News

Builder Confidence is Good, But it Could be Better

Posted To: MND NewsWire

The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) moved one point higher this month. However, at 66, NAHB's measure of builder confidence in the new home market stayed within the 64 to 66 range where it has been now for four months. "While 30-year mortgage rates have dropped from 4.1 percent down to 3.6 percent during the past four months, we have not seen an equivalent higher pace of building activity because the rate declines occurred due to economic uncertainty stemming largely from growing trade concerns," said NAHB Chief Economist Robert Dietz. "Although affordability headwinds remain a challenge, demand is good and growing at lower price points and for smaller homes." The HMI is derived from a survey of its new home builder members that NAHB has conducted...(read more)

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New Home Sales Expected to Reflect Interest Rate Trend

Posted To: MND NewsWire

New home purchases are expected to be significantly higher in July according to data released by the Mortgage Bankers Association (MBA). Its monthly Builder Application Survey (BAS), indicates that applications for new home purchase mortgages increased by 11 percent month-over-month and were up 3.2 percent from July 2018. These estimates do not include any adjustment for typical seasonal patterns. "July's strong new home sales increase on a monthly and annual basis was driven by the ongoing decline in mortgage rates, combined with steady housing demand and a still-healthy job market," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "The average loan size decreased last month, likely influenced by the increase in the first-time homebuyer share, as these buyers...(read more)

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MBS RECAP: Relative Stability + Moderate Losses = MBS Fighting Back

Posted To: MBS Commentary

Perhaps more than any other day in the past few weeks, today stood as an example of the mortgage market's ability to put up a fight when the time is right. As we've discussed frequently, they've been getting pummeled by Treasuries as the latter's yields fell to new multi-year lows. MBS prices are at multi-year highs, to be fair, but in an underwhelming way compared to what's been going on in Treasuries. Our thesis was that the mortgage market needed TIME and STABILITY from the bond market, and it could work with one at a time if need be. If bonds could manage to weaken a bit, but not too much, that would be a bonus. Today, then, delivered on the the "stability" side of the equation with yields trading their narrowest range in more than 2 weeks and ticking that...(read more)

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Mortgage Rate Weirdness May Be Working in Your Favor Today

Posted To: Mortgage Rate Watch

Things have been weird enough for mortgage rates recently that we were forced to add a " Temporary Note on Mortgage Rate Inconsistency " to our daily coverage recently. It will likely return before too long, but with a few edits for clarity. Edits will also need to account for days like today, which offered a prime example of how the inconsistency can be corrected. There's a decent chance those first 3 sentences are confusing and/or relatively meaningless, so let's change that! Mortgage rates aren't the only rates out there. They exist in an ecosystem with more established players like US Treasury yields. They move so much like Treasury yields that even very smart people mistakenly believe Treasuries (specifically, the 10yr) dictate mortgage rates. Recently though, mortgage rates have moved...(read more)

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MBS Day Ahead: How Low Can We Go? And Why Mortgage Rates Can't...

Posted To: MBS Commentary

10yr yields rallied aggressively yesterday, and for no reason more compelling than a proverbial "snowball rally compounded by technicals and algorithmic trading." Ugh! I hate typing that stuff. It's annoying to be forced to reduce market movement to what feels like a "couldn't come up with anything better" type of explanation. We could also say that yesterday was the market's way of "giving up" after stocks were unable to sustain a bounce back from their rout on Wednesday. A surge lower in European bond yields didn't hurt either. If yields can so casually blast below 1.50%, it begs the question of how low we can go. The answer is complicated, to be sure. Certainly, we already know 10yr yields can go to 1.32%. They've done that before. We can...(read more)

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DPA, Non-QM Products; Deficits, Debt, The Yield Curve, and Mortgage Rates

Posted To: Pipeline Press

Some international rates have gone through 0 percent and are now negative. The low rates and high volumes have caused lenders to focus less on long-term planning and more on closing loans. Who can blame them? How would U.S. mortgage rates near 0 percent impact the future refi market for lenders? Here’s a piece worth a skim on why mortgage rates probably won’t hit 0% Mortgage Rates: Thinking the Unthinkable .” The yield on the 10-year Treasury note has fallen below the two-year yield for the first time since the financial crisis, causing a sell-off in the stock market. The 30-year yield is at an all-time low. An inverted yield curve has preceded every recession since 1950 by seven to 24 months. But former Federal Reserve Chair Janet Yellen says the latest inversion of the yield...(read more)

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MBS RECAP: Mortgage Market Starting to Play Like it Wants to Stay In The Game (Finally)

Posted To: MBS Commentary

Bonds digested the week's busiest day of economic data, by far, today. But markets in general are only interested in data that changes the economic narrative. Today's only real candidate in that regard would have been a surprisingly weak Retail Sales report. Since we didn't get that (it was stronger), bonds underwent a token sell-off and were quickly right back to paying attention to other things. Europe volunteered to be one of those "other things" today with talk of central bank stimulus from an ECB official. There were also a few blows traded in the trade war saga with China vowing "countermeasures" and Trump tweeting that any trade deal had to be on "our terms." No game changers there, but they certainly didn't hurt bonds. The afternoon saw...(read more)

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Mortgage Rates Fall Back Down to 3-Year Lows

Posted To: Mortgage Rate Watch

Mortgage rates fell today as the underlying market for mortgage-backed-securities (MBS) actually did a better job of keeping pace with broader bond market gains--not something they've been doing very well lately! For some lenders, it was enough to get them back to August 6th's levels, which were the best in nearly 3 years. The average lender can quote a conventional 30yr fixed rate of 3.625% for top tier scenarios. That said, there is much more variability between lenders at the moment. Take a look at the " Temporary Note on Mortgage Rate Inconsistency " below to learn more about why things have been volatile and inconsistent. There's no reason to expect broader market volatility to suddenly disappear, but as long as Treasury yields don't undergo a massive spike, the mortgage market should...(read more)

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Digital, Reno Products; Originator Survey; FHA Condo Update

Posted To: Pipeline Press

Plenty of economists watch builder activity and mood swings as early indicators of future economic health. Builder confidence in the single-family 55+ housing market continued in positive territory in the second quarter of 2018, according to the HMI . We’ve been hearing about skilled labor shortages, lack of buildable land, raw material price volatility, and permit & regulatory costs for years, but aging Baby Boomers are downsizing, many into condominiums. The 55+ multifamily condo HMI is the second-highest reading since the inception of the index in 2008. I bring this up because of the FHA condo announcement yesterday, spelled out below and good news for many. Lender Products and Services OpenClose ® has added industry technology veteran Allen Pollack as the company’s new...(read more)

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MBS Day Ahead: Active Day For Data

Posted To: MBS Commentary

In the day just passed, bond markets primarily reacted to overseas economic data with many of the reports in Europe coming in flat to weaker. Combined with the weakest Chinese manufacturing data in years, it was enough to push bonds through recent resistance levels and to new low yields since 2016. The domestic hours were especially influenced by a massive drop in equities. In the day ahead, we'll get the biggest slate of domestic economic data of the week, led by Retail Dales and Philly Fed at 8:30am. The consumer spending sector is arguably the last bastion of economic health in the US along with stable employment numbers. Any cracks in Retail Sales would thus be a big deal whereas an unexpected surge might not do too much to hurt bonds given the laundry list of other concerns. That's...(read more)

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New FHA Rule Will Ease Condo Approval Process

Posted To: MND NewsWire

The long-waited Federal Housing Administration (FHA) rule regulating condominium lending was finalized Wednesday afternoon. The Department of Housing and Urban Development (HUD), the parent agency of FHA, published the final regulation and the policy implementation guidance establishing a new condominium approval process. As a way of background, under existing rules, to obtain an FHA mortgage a borrower must not only satisfy the lender and the FHA that he or she is a qualified buyer but must purchase a unit that is itself qualified for financing. According to the National Association of Realtors®, FHA has put its stamp of approval on many complexes, but given the universe, not nearly enough. Of the more than 150,000 condominium projects in the U.S., only 6.5 percent are approved to participate...(read more)

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MBS RECAP: Have You Heard The One About Mortgage Underperformance?!

Posted To: MBS Commentary

Living under a rock has a lot of advantages: generally low housing cost, durability, no roof maintenance, and if you're strong enough, you have something to throw at anyone who approaches your castle in a threatening way. The disadvantages may be slightly more numerous, but I can only really think of one right now: the lack of access to timely market-related news! All that nonsense to say: unless you've been living under a rock, you've probably heard or seen that mortgage rates and/or MBS are doing an absolutely lousy job of keeping pace with the move in the Treasury market. Even from under said rock, you could still probably hear other people whining about this dynamic, so you really have no excuse not to know. Despite our knowledge of this general phenomenon, reality is still...(read more)

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Mortgage Rates Are a Mess!

Posted To: Mortgage Rate Watch

Mortgage rates were unchanged for many lenders today which is utterly and completely shocking given the other market developments that tend to coincide with rates moving lower. Specifically, stocks tanked and 10yr Treasury yields plummeted to the lowest levels since September 2016. For anyone under the impression that 10yr yields dictate the direction of mortgage rates without exception, it's high time to reassess that worldview. The bottom line is that rates are doing an absolutely terrible job of keeping pace with the rally in the broader bond market. The " Temporary Note on Mortgage Rate Inconsistency " below will be informative in that regard. With that in mind, many lenders were unchanged today for slightly less complicated reasons. Sure, underlying mortgage bonds didn't improve as quickly...(read more)

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MBS Day Ahead: Suddenly, Bonds Are Pretty Sure The Global Economy is Doomed

Posted To: MBS Commentary

In the day just passed, bonds sold off by a completely average amount in the context of recent volatility and new trading range. Motivations were above-board and easy to confirm (trade war headlines). The move was mirrored in stocks and other assets. Bottom line: as far as moderately-paced sell-offs are concerned, this one was totally boring. The overnight session was less boring with a slew of flat-to-weaker economic data around the globe. It prompted a gradual rally at first, followed by a sharp rally bringing yields to new long-term lows before the open. In the day ahead, traders who haven't figured out what's going on yet will continue to scratch their heads and try to piece together the new reality. Actually, it's an old reality that has simply been coming into focus by increasing...(read more)

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Broker, Non-QM Products; Policy and Procedure Trends

Posted To: Pipeline Press

Data compiled by the American Bar Association shows that average lawyer pay has nearly doubled since 1997! Mortgage loan originators enjoy comparing themselves to attorneys, despite the formal educational differences, the time involved with case work stretching out years, and the initial expense of law school most attorneys attend after college. And then there’s the bar exam with its “not a sure thing” passing rate . How about an exam for homebuyers before a sale can be approved? Spain has one . Also known as the Housing Credit Law, “it should greatly diversify what is on offer for homebuyers while providing better protections.” How about an exam for borrowers, the first question being, “Do you know that you must pay back a loan?” Okay, I’ll stop...(read more)

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Refinance Spree Continues with Rates at Near 3-Year Lows

Posted To: MND NewsWire

The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of mortgage application volume, rose 21.7 percent on a seasonally adjusted basis during the week ended August 9. MBA attributed the substantial decline in interest rates at the beginning of the week for the surge of applications which were concentrated on mortgage refinancing. The Composite Index rose 20 percent before seasonal adjustment. Purchase mortgage applications were only slightly affected by the tsunami; that index rose only 1.9 percent from the previous week on an unadjusted basis and 1 percent before adjustment. The unadjusted index was 12 percent higher than during the same week in 2018. The Refinance Index however was up 37 percent from the previous week to its highest level since July 2016 and was...(read more)

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MBS RECAP: Old Friend Spoils What Might Have Been a Calm Day

Posted To: MBS Commentary

Bonds began the day in relatively unchanged territory versus yesterday's close and soon encountered the slightly stronger CPI data (2.2 vs 2.1% for CORE CPI). This gave the appearance of selling pressure for a few minutes, but as expected, it was mild and temporary. In fact, 10yr yields and MBS were at their best levels of the day less than an hour later. 2yr yields, however, didn't see the same sort of bounce. One might argue that the CPI data is only important inasmuch as it failed to give the Fed a clear green light to cut by 50bps at the next meeting (something a lot of people think might actually happen). The 2yr weakness combined with the 10yr recovery brought the yield curve dangerously close to 0.00.... a level that doesn't matter in the slightest except that a lot of people...(read more)

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Mortgage Rates Jump After Tariff Delay

Posted To: Mortgage Rate Watch

Mortgage rates were still unchanged for many lenders as of this morning. There were even a few offering slightly lower rates compared to yesterday morning's offerings. That was a welcome development considering broader bond markets (which generally dictate rates) were pointing toward higher rates at the time. This can be explained by the inconsistent behavior of the mortgage market with respect to US Treasuries (and/or "the broader bond market") discussed in greater detail in the temporary "note on mortgage rate inconsistency" below. Today's iteration had more to do with the volatility component as bonds were somewhat rocked by headlines regarding the delayed implementation of several recently announced tariffs. If the announcement of tariffs was good news for rates 3 weeks ago, the delay is...(read more)

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Loan Performance Responds to Slowing Economy, Natural Disasters

Posted To: MND NewsWire

Both the Mortgage Bankers Association (MBA) and CoreLogic issued data on recent loan performance on Tuesday. For CoreLogic the Monthly Loan Performance Report covered May, MBA's National Delinquency Survey is for the second quarter of this year. MBA notes an increase in the overall seasonally adjusted delinquency rate to 4.53 percent of all loans outstanding at the end of the quarter. This is an increase of 11 basis points (bps) from the first quarter of this year and 17 bps from the second quarter of 2018. The share of loans that were 30 days or more past due increased by 4 bps to 2.62 percent, the 60-day rate was unchanged at 0.81 percent and the 90-day rate was up 7 bps to 1.10 percent. Those numbers do not include loans in the process of foreclosure. Those loans, the foreclosure inventory...(read more)

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Broker, DPA Products; August Events; Mortgage Rates Slow to Drop - Why?

Posted To: Pipeline Press

As we digest the news that CIT is buying Mutual of Omaha Bank , others are looking at demographics. Families moving create jobs, right? From 2017 to 2018, roughly 32 million Americans moved. The reasons include family, work, and housing reasons, obviously. The five most common reasons ? 5.3 million moved because they wanted to move to a better house or apartment, 4.1 million moved to start a family, 3.6 million for a miscellaneous family reason, 3.3 million for a new job, and 2.6 million because they wanted cheaper housing. Hundreds of thousands moved to attend or leave college, wanted a change of climate, millions wanted to buy, not rent, or wanted an easier commute. And they are moving into smaller houses. After rising for a decade, average new home sizes are falling as builders pivot away...(read more)

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MBS Day Ahead: First Econ Data of The Week, But Bonds Have Bigger Concerns

Posted To: MBS Commentary

In the day just passed, bonds put in their second biggest rally day of the past 3 weeks (the crazy ones) and their biggest rally day since yields bottomed out last week. Strikingly, there was no major singular reason for the move, unless we wish to speak in generalities such as "global growth concerns." Still, that probably doesn't quite capture the essence of bond buying motivation as it relates to yesterday's trading session. In the day ahead, we'll be treated to the week's first economic data in the form of the Consumer Price Index--an inflation report that has managed to be a big market mover at times in the past. The market movement potential is significantly lower at the moment, however. There are a few reasons for this. The first is those proverbial "global...(read more)

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MBS RECAP: Light Volume Snowball Rally For Treasuries. MBS, Not So Much

Posted To: MBS Commentary

There were no significant scheduled events in the offing today. Volumes were down sharply in the bond complex as well (less than 50% of recent highs). That made for a bit of a slippery slope of illiquidity as last week's short positions were flushed out and day traders chased a few big options trades. If there was actual underlying inspiration, the best case to be made was for general global growth anxiety with a growing list of anecdotes providing cause for concern rather than hope. All of the above helped Treasuries rally sharply , with 10yr yields making it as low as 1.628% by the afternoon and officially closing at new multi-year lows. MBS, on the other hand, had a downright frustrating day. They were generally unable to take part in the rally. Fannie 3.0 coupons struggled to return...(read more)

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Mortgage Rates Miraculously Flat Despite Massively Lower Treasury Yields

Posted To: Mortgage Rate Watch

Mortgage rates were unchanged to slightly higher today--a claim that utterly boggles the mind of anyone who thought they understood the relationship between bond markets and the mortgage world. ALMOST without fail, a big drop in 10yr Treasury yields will coincide with lower mortgage rates. In fact, many people believe (albeit incorrectly) that mortgage rates are based on the 10yr yield. But today, despite a substantial drop in Treasury yields, mortgage rates are stuck in the mud. Since this could continue to be the case, I'm going to include the following brief statement/reminder until the situation subsides: A note on mortgage rates not improving even when 10yr yields are falling: Mortgages and the bonds that underlie them (MBS) are subject to one major uncertainty that doesn't affect US Treasuries...(read more)

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Fannie/Freddie Universal MBS Launch Has Been Seamless So Far

Posted To: MND NewsWire

After years of planning, the two government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac launched their uniform mortgage-backed security (UMBS) in early June. So far, the Urban Institute (UI) likes what it sees. UI analysts Karan Kaul and Laurie Goodman say the early reaction of investors to the new instrument is encouraging. The UMBS is actually issued by the common securitization platform (CSP) which was developed jointly by the GSEs under the direction of their conservator and regulator the Federal Housing Finance Agency (FHFA). The security is backed by mortgages guaranteed by one or the other of the GSEs. Prior to the advent of the new security, each of the GSEs issued their own securities, each with its own securitization practices, terms, and prices. This was a situation that...(read more)

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MBS Week Ahead: Sideways Baseline Waits For Inspiration (And Wonders

Posted To: MBS Commentary

In the week just passed, bonds began to settle into a range after the sharp move lower in the previous week (driven by flaring trade tensions). This settling process didn't truly emerge until Thursday. Before that bonds rallied hard into Wednesday morning mostly on follow through from the week's early move (which was driven by China's "doubling down" response on Trump's tariff tweets). The follow-through brought a European component into the mix as German Bunds surged to new all-time lows. A sharp bounce on Wednesday afternoon (right after European markets closed) set the stage for a complete reversal of the trend. Thursday morning weakness added to the case but bond yields couldn't make it up and over 1.80% before the consolidation momentum kicked in. In the week...(read more)

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Joe Sanchez
Allied Equity
Ph: 909-932-9226Fax:909-803-9840
400 North Mountain Ave., Suite 223
Upland, CA 91786 US
CA DRE License # 01201910, NMLS: 359382, Company ID: 359090
www.alliedequity.com
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