Mortgage and Finance

Mortgage News Daily

Posted To: MBS Commentary

Yesterday morning's notes presented a mostly bullish case for bond markets with today as the first potential break from the corrective/consolidative post-rally weakness. Today, let's talk about what to watch for if things turn out to be less than bullish . It's pretty simple really, and goes back to the "gap" that we've discussed a few times since it's formation with the start of trading last week. Gaps like these serve one of two purposes . They either constitute a warning about the end of a rally or hint that it is shifting into higher gear. Normally, we'd expect the gap to be "filled" more quickly if it was warning about the end of the rally, so that's hopeful. In the event that bond markets are weakening, however, the gap serves an important...(read more)

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10/23/2014 5:32:01 AM

Posted To: MBS Commentary

When you see the word " consolidation " in market analysis--especially with respect to movement in securities prices/yields--it might as well read "correction." Simply put, a consolidation is the diffusion of the volatility. Rates spike higher or lower. Market participation picks up significantly. Then the crowd disperses. That almost always involves an initial, instinctive move back in the direction from whence the original move came, and as we discussed this morning , past examples show the process can last 5 days before markets are free to go about their business. Bottom line, today was flat and tomorrow shouldn't be. MBS Pricing Snapshot Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live. MBS FNMA...(read more)

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10/22/2014 2:47:22 PM

Posted To: Mortgage Rate Watch

Mortgage rates had their single flattest day since October 2nd today. This is the polar opposite of last week's exceptional volatility. The most interesting thing about it is that this is the way rates typically respond to that kind of rapid movement. It goes something like this: one day, in particular, sticks out as utterly insane and the ensuing days get less and less insane until the insanity completely dries up. Last Wednesday was ground zero for insanity , and today there's none to be found. The second most interesting thing about that is that it usually results in the resumption of movement after days like today. History suggests that movement can be in either direction. That's good news for risk-takers inclined to float as it would minimize the losses incurred if markets move against...(read more)

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10/22/2014 2:15:00 PM

Posted To: MND NewsWire

Frank E. Nothaft and Leonard Kiefer, Freddie Mac's chief and deputy chief economists have come up with a formula for lifting the economy from its continuing low-growth status to a trajectory of robust sustainable growth. And that's what they are calling it, L.I.F.T. The acronym stands for Labor, Income, Fixed Investment, and Trust and in the current edition of the company's U.S. Economic and Housing Market Outlook they lay out the parameters for each. Labor The labor market must fully recover, providing solid employment gains, less long term unemployment, and broad-based income growth. Unless the labor market recovery accelerates, any improvement in the housing market will also lag. Last month the unemployment rate finally fell below 6 percent for the first time since the recovery began but...(read more)

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10/22/2014 1:26:38 PM

Posted To: MBS Commentary

Here's a two-part chart that does a nice job of framing today's activity in both a longer and shorter term perspective. As you can see, we definitely had some bond-market-specific weakness this morning. Unfortunately for the sake of accurate analysis, the weakness occurred in close proximity to the Consumer Price Index (CPI) data. This logically resulted in media outlets pinning the weakness on CPI, but the two were completely unrelated . The factual culprit for this morning's weakness was a big corporate bond offering from Verizon. They did the same thing last fall and bond markets took a big, mysterious hit then too (though the past example was a much bigger deal than today's). Here's the coverage from last year's . The nice thing about weakness induced by corporate...(read more)

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10/22/2014 11:32:45 AM

Posted To: Pipeline Press

If I was going to build a house, I'd want to make sure it was on the right lot. For some folks that doesn't work out so well - thanks to Ali F. for sending this in. As the MBA's conference wraps up today in Las Vegas without me finding the Segway rental desk, I am reminded that indeed the vast majority of people in the mortgage industry are truly interested in helping borrowers, or helping companies help borrowers, regardless of the city in which the convention is held. Speaking of cities, if you're in Fort Worth Friday, come say hello! I will be in Fort Worth Texas at Cendera Center (3600 Benbrook Hwy.) to talk about the conference and current trends with lenders out there - there are definitely some common themes. Join us for commentary at 1PM followed by a networking reception. Generally...(read more)

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10/22/2014 8:49:17 AM

Posted To: MND NewsWire

Falling interest rate precipitated a major refinancing rally during the week ended October 17 even though Columbus Day shortened the business weeks in some locations. The Mortgage Bankers Association's (MBA's) Refinance Index jumped 23 percent compared to the previous week, the largest increase for the index this year, far surpassing an 11 percent gain in January and taking the index to its highest level since November 2013 . Applications for refinancing made up a 65 percent share of all applications compared to 59 percent the previous week and the average size of a loan for refinancing rose to $306,000 the highest level since MBA started its survey in 1990. Refinance Index vs 30 Yr Fixed The surge in refinancing drove the MBA's Market Composite Index up 11.6 percent on a seasonally adjusted...(read more)

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10/22/2014 6:52:55 AM

Posted To: MBS Commentary

It's been a pretty boring and consolidative week for bond markets so far, so let's have some fun. What follows is essentially a bullish case for bond markets, and you should be aware of some caveats before we begin. 1. The conclusion is based on past precedent, which isn't always a guarantee for the future 2. The past has been generally bullish for bonds for 30 years, give or take, and much of the current bearish case is based on the notion that 2012's low yields were generational In other words, the past has indeed been a good indicator for the future of bond markets as long as we've been in this 30yr bull trend and today's bullish conclusion draws on past precedent. If it's true that we put in long term yield bottoms in 2012, then we'd logically start seeing...(read more)

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10/22/2014 5:36:11 AM

Posted To: MBS Commentary

It turned out to be an exceedingly uncomplicated day for Treasuries by the time US trading hours rolled around. Before that, yields moved sharply higher in the overnight session after news of potential ECB corporate bond buying . This isn't something that's currently on the table for discussion in the upcoming meeting, but multiple sources say it's something the ECB has worked on. Given Germany's opposition to sovereign debt buying combined with the need for the central bank to "do as much as possible," it definitely makes sense to many market participants as a legitimate possibility. Most of the damage was done by 8am and all of it was done by 9am. From there, 10yr yields went no higher for the rest of the day. Incidentally, this resulted in the highest marks of the...(read more)

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10/21/2014 3:14:34 PM

Posted To: Mortgage Rate Watch

Mortgage rates continue to bide their time , holding just under 4 percent on average. Some borrowers might see their quote move up .125% from yesterday, but others will be quoted the same rate with slightly higher closing costs. A few lenders didn't move at all, but they're the exception. Overall, rates were slightly weaker, resulting in a better balance between 3.875% and 4.0% as the two most prevalently quoted conforming 30yr fixed rates for top tier borrowers. Given the strong move higher in the stock market combined with the fact that rates have been taking a lot of guidance from stocks, today's marginal increase in rates is actually a strong showing. The bond markets that underlie mortgage rate movement have done more to march to their own beat while broader markets make bigger moves....(read more)

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10/21/2014 2:18:00 PM

Reuters Business News

Reuters: Business News

NEW YORK (Reuters) - Comcast Corp reported on Thursday higher quarterly revenue and income as more people signed up for its high speed Internet service.

10/23/2014 5:54:04 AM

NEW YORK (Reuters) - Dow component Caterpillar Inc was among Thursday's biggest premarket movers, with the heavy machinery maker up on heavy volume following its results.

10/23/2014 5:53:29 AM

(Reuters) - Caterpillar Inc posted a higher-than-expected quarterly profit on Thursday as strong demand for its products from the construction and oil and gas industries in North America offset weak demand from the global mining industry.

10/23/2014 5:51:38 AM

DETROIT (Reuters) - General Motors Co on Thursday posted a higher-than-expected profit for the third quarter on strong demand in its home North American market and in China.

10/23/2014 5:36:57 AM

FRANKFURT (Reuters) - German pilots' union Vereinigung Cockpit (VC) has proposed restarting talks with Lufthansa over pay and early retirement benefits but does not rule out further strikes during the negotiations.

10/23/2014 5:24:25 AM

NEW YORK (Reuters) - U.S. stock index futures were higher on Thursday, implying a rebound from the previous session as investors used the drop to add to positions and looked ahead to the release of some key corporate reports for further incentives.

10/23/2014 5:20:33 AM

LONDON/BEIJING (Reuters) - Euro zone businesses performed much better than forecasters expected this month and China's vast factory sector grew a shade faster but there were worrying signs that the upturn could be short-lived.

10/23/2014 4:47:09 AM

TOKYO (Reuters) - Honda Motor Co said on Thursday its president and 12 other executives would take an unprecedented, quality-related pay cut after the Japanese automaker announced the fifth recall in a year of its new Fit hybrid model.

10/23/2014 4:42:24 AM

NEW YORK (Reuters) - U.S. federal prosecutors are trying to determine whether Japanese auto parts maker Takata Corp misled U.S. regulators about the number of defective air bags it sold to automakers, including Toyota Motor Corp and Honda Motor Co Ltd , The Wall Street Journal reported on Wednesday.

10/23/2014 4:35:32 AM

LONDON (Reuters) - Euro zone businesses performed much better than anyone expected this month but did so by slashing prices again, and optimism about the future fell to its lowest level in over a year, surveys showed on Thursday.

10/23/2014 4:04:07 AM
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