All Things in Moderation

Vital Statistics:

Stocks are higher this morning as we begin the Fed meeting. Bonds and MBS are up small.

Consumer confidence fell in October, according to the Conference Board. “Consumer confidence fell again in October 2023, marking three consecutive months of decline,” said Dana Peterson, Chief Economist at The Conference Board. “October’s retreat reflected pullbacks in both the Present Situation and Expectations Index. Write-in responses showed that consumers continued to be preoccupied with rising prices in general, and for grocery and gasoline prices in particular. Consumers also expressed concerns about the political situation and higher interest rates. Worries around war/conflicts also rose, amid the recent turmoil in the Middle East. The decline in consumer confidence was evident across householders aged 35 and up, and not limited to any one income group.”

I did a deeper dive into this phenomenon in my latest Substack article. Check it out and please consider subscribing.

Home prices rose 0.4% month-over-month and 2.6% year-over-year according to the Case-Shiller Home Price Index. We are definitely seeing a reversal of fortunes regionally, with the strongest areas of 2020-2022 (Phoenix, Las Vegas) underperforming, while the weakest areas since the Great Recession (New York, Chicago, Detroit) now outperforming.

The FHFA House Price Index increased 0.6% MOM and 5.6% YOY. “U.S. and regional house price gains remained strong over the last 12 months.” said Dr. Nataliya Polkovnichenko, Supervisory Economist in FHFA’s Division of Research and Statistics. “The South Atlantic division showed moderate weakness in August, while the remaining census divisions posted positive price appreciation from the previous month.”

Redwood Trust reported third quarter earnings yesterday. Book value fell by 5.3% as MBS spreads widened. The company purchased $800 million of jumbo loans, a big jump from Q2 and a year ago. Redwood has been increasing its counterparty exposure, focusing primarily on depository institutions. Business purpose originations of $411 million was marginally higher than Q2 and down 28% compared to a year ago.

Mortgage REIT AGNC Investment reported earnings per share that beat the street, although the company pre-announced lousy earnings a while ago. Book value per share fell 14% compared to the second quarter. “A complex set of domestic and global factors, including heightened geopolitical risks, Treasury supply concerns, and an approaching inflection point in the Federal Reserve’s monetary policy, drove the significant volatility and underperformance in the Treasury and other fixed income markets,” said Peter Federico, the Company’s President and Chief Executive Officer. “In environments in which Treasury securities experience considerable price instability and the market struggles to find a new equilibrium, Agency MBS typically underperform, which was indeed the case in the third quarter. As challenging as this period has been for all bond market participants, the current opportunity for both levered and unlevered investments in Agency MBS remains historically attractive on both an absolute and relative basis. Once the uncertainties associated with the current market environment subside, we believe that a durable and attractive investment environment will emerge.”

MCM announced its new Artificial Intelligence Fallout Analytics Service: “CloseLytics Pro” MCM’s founder states: “The guessing game of what’s my mortgage pipeline exposure is over….” MCM’s AI based neural network software system “CloseLytics Pro” utilizes the latest data science techniques and AI to accurately predict which loans will close with or without renegotiations in all market conditions. The system is designed to be self-correcting with automatic back testing and reporting. MCM has over 29 years of experience with managing mortgage pipeline risk using state of the art OAS technology and proven statistically based fallout analytics and has been developing and using AI tools for over 10 years. CloseLytics Pro can be integrated with any Pipeline Risk Management System or hedge advisory service. The system not only can provide singular closing rate predictions on an individual loan basis it also provides forecasts by loan for any range of market movement. For more information , contact Dean Brown @ 858 483 4404 x101

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Filed under: Economy | 13 Comments »

Vital Statistics:

Stocks are higher this morning after good numbers from Amazon. Bonds and MBS are down small.

Personal Incomes rose 0.3% in September, while spending rose 0.7%. The PCE Price Index rose 0.4% MOM which was 0.1% above expectations. On an annual basis, the PCE Price Index rose 3.4%, which was in line with expectations. If you strip out food and energy, the PCE Price Index rose 0.3% month-over-month and 3.7% year-over-year. The savings rate declined again.

Consumer sentiment fell in October, according to the University of Michigan Consumer Sentiment Survey. “Consumer sentiment confirmed its early-month reading, falling back about 6% this October following two consecutive months of very little change. This decline was driven in large part by higher-income consumers and those with sizable stock holdings, consistent with recent weakness in equity markets. Across all consumers, one-year expected business conditions plunged 16% and expectations over consumers’ own personal finances in the year ahead fell 8%, reflecting ongoing concerns about inflation and, to a lesser degree, uncertainty over the implications of negative news both domestically and abroad.” Inflationary expectations increased substantially, rising from 3.2% in September to 4.2% in October.

So consumption is strong, but the consumer is depressed. What is going on? Yesterday’s GDP report provides a bit of a clue. Much of the increase in consumption was accounted for by housing, insurance, and health care. These are necessities, not discretionary goods, and no one gets a dopamine hit from writing a bigger check to the landlord or flood insurance company.

After the data this week the Fed Funds futures are predicting the Fed does nothing at its meeting next week, and is handicapping a 16% chance of a hike in December.

The number of seriously delinquent mortgages dropped to an all-time low in August, according to CoreLogic. “U.S. mortgage performance remained strong in August, supported by a robust job market and a healthy economy,” said Molly Boesel, principal economist at CoreLogic. “However, this thriving job market comes at a time when interest rates are quickly rising, which is keeping many potential homebuyers from being able to secure a mortgage.”

This partially explains why servicing valuations remain so high. Prepayment assumptions assume that people will only pay off their mortgage if they move or die, delinquencies are low, and short term rates are high enough that you can earn interest on escrow. PennyMac Mortgage Trust said in its earnings release that it is valuing its MSR portfolio at 6.3x.

Filed under: Economy | 25 Comments »

Vital Statistics:

Stocks are lower this morning after some disappointing earnings last night. Bonds and MBS are down.

New Home sales rose 12% MOM and 34% YOY to a seasonally adjusted annual rate of 759,000. The median sales price fell 12% YOY to $418,800, while the average sales price fell 5% to $503,900.

Mortgage applications fell 1% last week as purchases fell 2% and refis rose 2%. “Ten-year Treasury yields climbed higher last week, as global investors remained concerned about the prospect for higher-for-longer rates and burgeoning fiscal deficits. Mortgage rates followed Treasuries higher, with the 30-year fixed mortgage rate jumping 20 basis points to 7.9 percent – the highest since 2000. Rates have now risen seven consecutive weeks at a cumulative amount of 69 basis points,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Mortgage activity continued to stall, with applications dipping to the slowest weekly pace since 1995. These higher mortgage rates are keeping prospective homebuyers out of the market and continue to suppress refinance activity. The ARM share of applications inched up to 9.5 percent, its highest since November 2022.”

Homebuilder Pulte Homes reported third quarter earnings. Earnings per share rose 7.8% while revenues rose 3%. Gross margins came in at 29.5%. Despite rising rates, new orders rose 43%. On the subject of mortgages and incentives, Pulte CEO Ryan Marshall said:

We continue to use the permanent 30-year buy-down as probably our most powerful incentive. Right now, we’ve got national incentives that offer 5.75% on a 30-year fixed, so I think given rates today on the open market would be over 8%, to be able to get a new home in a great location of the quality and design features that we have at 5.75%, I think is pretty powerful.

I’ll remind everybody, what we’ve done is we’ve simply redistributed incentives that we’ve historically offered toward cabinets and countertops and things of that nature, we’ve redirected those to interest rate incentives, and I think that’s the–you know, that’s been the most powerful thing for that buyer group.

Pulte says that they have about $35,000 in incentives baked into the price, so if they are losing 5-6 points on the mortgage, that is well within the $35,000 limit.

MCM announced its new Artificial Intelligence Fallout Analytics Service: “CloseLytics Pro” MCM’s founder states: “The guessing game of what’s my mortgage pipeline exposure is over….” MCM’s AI based neural network software system “CloseLytics Pro” utilizes the latest data science techniques and AI to accurately predict which loans will close with or without renegotiations in all market conditions. The system is designed to be self-correcting with automatic back testing and reporting. MCM has over 29 years of experience with managing mortgage pipeline risk using state of the art OAS technology and proven statistically based fallout analytics and has been developing and using AI tools for over 10 years. CloseLytics Pro can be integrated with any Pipeline Risk Management System or hedge advisory service. The system not only can provide singular closing rate predictions on an individual loan basis it also provides forecasts by loan for any range of market movement. For more information , contact Dean Brown @ 858 483 4404 x101

Goldman released its 2024 housing outlook yesterday, which says that 2024 will look a lot like 2023, with mortgage rates stuck between 7% and 8%. They see home price appreciation more or less stagnating – rising only 1.3% for the year. They see housing starts falling next year, weighed down by a huge backlog of multi-family properties under construction with poor absorption rates. “While the sharpest declines in housing activity and prices are now long behind us, the recent jump in mortgage rates and the prospect that they are likely to remain elevated for the foreseeable future present headwinds to the economy’s most interest rate sensitive sector.” Existing home sales are expected to fall to the lowest level since the early 90s, at 3.8 million units.

Filed under: Economy | 8 Comments »

Vital Statistics:

Stocks are lower this morning after the 10 year bond yield broke through 5% overnight. Bonds and MBS are down.

The week ahead will have new home sales, Q3 GDP and personal incomes / outlays which contain the PCE inflation index. We don’t have any Fed-speak as we are in the quiet period ahead of next week’s FOMC meeting.

The US government ended the fiscal year with a deficit of $1.7 trillion. That isn’t helping sentiment in the bond market, as rising rates increase the amount of debt the US must sell in order to cover interest payments. This is part of the reason why bonds can’t get out of their own way.

Part of the issue is the “this time is different” mentality in the markets – that the Fed can execute the most dramatic rate hiking cycle in history without triggering a recession.

I suspect we will find that the rules haven’t changed, and we will hit a recession which will be the final nail in this bout of inflation’s coffin.

The relative value of renting versus buying a house has never been more skewed in the favor of renting. The relationship has eclipsed the levels we saw during the residential real estate bubble. The average mortgage payment is 52% higher than the average rent payment.

Going forward, what will bring the relationship back into balance? Falling rates will have to do the job given the scarcity of existing homes for sale. The supply and demand dynamics don’t seem to be there for a bear market in single family homes.

There is a glut of apartment construction however, and many of those projects might have made sense when interest rates were way lower, but won’t now. Apartment cap rates are generally in the mid single-digits and with rates where they are, it will be tough to cover the mortgage along with taxes and maintenance. So I expect to see further pressure on rental rates.

The National Multifamily Housing Council said the apartment market was loose in October. “A combination of rising interest rates and tightening lending standards has caused a decrease in the availability of debt financing for the ninth consecutive quarter,” noted NMHC’s Vice President of Research, Caitlin Sugrue Walter. “Buyers and sellers of apartments, meanwhile, remain unable to agree to terms on pricing, resulting in the sixth consecutive quarter of declining sales volume…Yet, continued softness in the apartment market means that we should expect the shelter component of inflation to come down eventually as well, which could help overall inflation to cool to the Fed’s 2% target and allow the Federal Reserve to start easing policy. Over the longer term, demand for multifamily housing remains strong based on demographic trends and market fundamentals.”

Filed under: Economy | 10 Comments »

Vital Statistics:

Stocks are lower this morning as earnings continue to come in. Bonds and MBS are up for once.

Jerome Powell’s speech yesterday was interpreted as hawkish despite some sentences that could be considered dovish.

Turning to monetary policy, the FOMC has tightened policy substantially over the past 18 months, increasing the federal funds rate by 525 basis points at a historically fast pace and decreasing our securities holdings by roughly $1 trillion. The stance of policy is restrictive, meaning that tight policy is putting downward pressure on economic activity and inflation. Given the fast pace of the tightening, there may still be meaningful tightening in the pipeline.

My colleagues and I are committed to achieving a stance of policy that is sufficiently restrictive to bring inflation sustainably down to 2 percent over time, and to keeping policy restrictive until we are confident that inflation is on a path to that objective. We are attentive to recent data showing the resilience of economic growth and demand for labor. Additional evidence of persistently above-trend growth, or that tightness in the labor market is no longer easing, could put further progress on inflation at risk and could warrant further tightening of monetary policy.

Along with many other factors, actual and expected changes in the stance of monetary policy affect broader financial conditions, which in turn affect economic activity, employment and inflation. Financial conditions have tightened significantly in recent months, and longer-term bond yields have been an important driving factor in this tightening. We remain attentive to these developments because persistent changes in financial conditions can have implications for the path of monetary policy.

Unfortunately, bond market sentiment is so awful right now that even neutral data / comments is considered bearish. This is often typical at the end of bear markets. The markets seemed to seize on the comment that “monetary policy is not too tight right now.”

The last month has seen an extraordinarily heavy amount of US issuance ($580 billion in the past 30 days) which works out to be an annualized pace of $6.9 trillion or about 3.8x 2022 issuance. The last month’s issuance probably won’t be repeated, although it pushed 10 year yields to multi-decade highs.

The punchline: As long as the economy keeps slowing, the Fed is done. If that changes they might have to hike some more.

The Atlanta Fed’s GDP Now estimate for Q3 is still above 5%. To me that doesn’t square with any of the other data we are seeing (Beige Book, ISM, consumer sentiment) but it has remained exceptionally high ever since a meh housing starts number in mid-August. I wonder how much this model is influencing the Fed and whether something is off – 5.4% GDP growth is ridiculously high, and the economy doesn’t feel ridiculously strong.

Western Alliance announced earnings yesterday which came in above expectations. EPS was up marginally from Q2, but down YOY based on higher interest expense and non-interest expense. Tangible book value per share increased on a QOQ basis. Provisions for credit losses decreased while charge offs increased slightly.

The office portfolio consisted of about 5% of loans, in mainly suburban locations. Only 6% of the portfolio has an LTV over 70. The conference call is at noon today, however the stock was up 3% in the aftermarket.

Job cuts continue in banking, with the top 5 lenders cutting 20,000 jobs so far this year. Wells and Goldman have led the charge.

Filed under: Economy | 16 Comments »

Vital Statistics:

Stocks are lower as bonds continue to be for sale. Bonds and MBS are down. We have 5 Fed speakers today, so it will be interesting to see if they address the carnage in the bond market.

Housing starts rose 7% MOM to a seasonally annual adjusted rate of 1.36 million. This is down 7.2% compared to a year ago. Building Permits fell 4.4% MOM and 7.2% YOY to a seasonally adjusted annual rate of 1.54 million.

Mortgage Applications fell 6.9% last week as purchases fell 6% and refis fell 10%. Note that last week was short due to the Columbus Day Holiday. “Applications decreased to their lowest level since 1995, as the 30-year fixed mortgage rate increased for the sixth consecutive week to 7.70 percent – the highest level since November 2000,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Both purchase and refinance applications declined, driven by larger drops for conventional applications. Purchase applications were 21 percent lower than the same week last year, as homebuying activity continues to pull back given reduced purchasing power from higher rates and the ongoing lack of available inventory. The ARM share was 9.3 percent, the highest share in 11 months, as some borrowers look for alternative ways to lower their monthly payments. Refinance activity was at its lowest level since early 2023. There is very limited refinance incentive with mortgage rates at multi-decade highs.”  

A homebuyer must earn at least $115,000 to afford the median home, according to Redfin. This is up 15% compared to a year ago. Wage growth has been around 5% over the past year, so the affordability issue is brutal. The typical mortgage payment is $2,866 which is an all-time high.

“In a homebuyer’s ideal world, rising mortgage rates would push demand and home prices down enough to make up for high interest payments. But that’s not what’s happening now: Although new listings are ticking up slightly, inventory is still near record lows as homeowners hang onto their low mortgage rates–and that’s propping up prices,” said Redfin Economics Research Lead Chen Zhao. “Buyers–particularly first-timers–who are committed to getting into a home now should think outside the box. Consider a condo or townhouse, which are less expensive than a single-family home, and/or consider moving to a more affordable part of the country, or a more affordable suburb.”

Philly Fed President Patrick Harker is ready to stop the interest rate hikes. “This is a time where we just sit for a little bit. It may be for an extended period; it may not. But let’s see how things evolve over the next few months.” On the subject of rate cuts, he said: “We’re not there yet, but we believe in lags,” he said. “So if we get into the range of, I don’t know, let’s call it 2.5%, [and] we’re continuing to move down, then something like that would at least have me considering whether or not it’s time for rates to start coming down.”

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Filed under: Economy | 44 Comments »

ital Statistics:

Stocks are higher this morning as investors focus on the Middle East. Bonds and MBS are down as investors fret about the hot CPI report last week. Many in the mortgage business will be at the MBA Annual in Philly.

The upcoming week will have a lot of housing data with housing starts, the NAHB Housing Market Index and existing home sales. We will also get industrial production and leading economic indicators. There will be plenty of Fed speakers with Jerome Powell speaking on Thursday.

The Biden Administration is talking about housing. Steps being taken include allowing FHA borrowers to count rental income from accessory units, new support for VA borrowers who become delinquent, expanded USDA loan access and updating 203k loans. The Administration might also want to address the alarming number of buybacks coming from Fannie and Freddie.

In my latest Substack post, I ask if we had a bubble in sovereign debt and compare the carnage in the bond market to the aftermath of the stock and real estate bubbles. Mohammed El-Arian said that this bond market is the worst in 150 years. Indeed, if you bought the 30 year Treasury in April of 2020, you would have lost 50% of your money at this point. Check it out and please consider subscribing.

Housing affordability is at an all-time low in the US. This is driving home sales to their lowest level since the real estate bust of 2008. Redfin forecasts existing home sales to come in at 4.1 million this year, the lowest level since 2008.

Given the rate-lock in effect, the only thing that can square the circle is increased building.

Filed under: Economy | 19 Comments »

Vital Statistics:

Stocks are higher this morning despite a stronger-than-expected CPI print. Bonds and MBS are down.

The consumer price index rose 0.4% month-over-month and 3.7% year-over-year, which was a touch above Street expectations. The core rate, which excludes food and energy, rose 0.3% MOM and 4.1% YOY, which was in line with expectations.

“US Core inflation came in line while headline measures were higher than consensus forecasts,” Mohamed El-Erian stated. “Together with relatively low weekly jobless claims of 209,000, the immediate market impact will be some upward pressures on market yields. Analytically, it is a reminder of the challenges of the ‘final mile’ of battling inflation, especially when core service inflation remains high and there is concern about the spillover into core CPI from higher energy prices.”

Shelter was the biggest contributor to the increase, with gasoline close behind. Shelter inflation rose 0.6% MOM and 7.2% YOY, the biggest increase since May. The shelter component presents a problem for the Fed in that prices are being driven by super-low supply, and I don’t see how an additional 25 basis points on the Fed Funds rate can affect that. The only thing that can fix the shelter issue is more homebuilding.

Other big increases in inflation include auto insurance (+18.9%), auto repair (+10%), transportation (+9.1%), and food away from home (+6%).

The labor market remains resilient, with only 209,000 initial unemployment claims. Separately, the United Auto Workers is extending its strike to a Ford truck plant in Kentucky.

The FOMC minutes were released yesterday. “A majority of participants judged that one more increase in the target federal funds rate at a future meeting would likely be appropriate, while some judged it likely that no further increases would be warranted….Participants generally judged that, with the stance of monetary policy in restrictive territory, risks to the achievement of the Committee’s goals had become more two sided….Participants generally noted that it was important to balance the risk of overtightening against the risk of insufficient tightening.”

Bond yields generally worked their way lower after the FOMC minutes. The Fed Funds futures took down their bets on a November tightening to below 10% and while the probability of a tightening by the December meeting remained around 26%.

The minutes mentioned that bank credit was tightening somewhat: Bank credit conditions appeared to tighten somewhat over the intermeeting period, but credit to businesses and households remained generally accessible. Check out the YOY change in bank credit, seems a bit more than just “tightening somewhat.” – first YOY decline since the Great Recession.

One explanation is that everyone over-borrowed when rates were 0% and don’t need to borrow now that rates have increased. Or it could mean that the problems in commercial real estate are beginning to affect the supply of credit.

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Earnings season kicks off tomorrow with the big banks reporting. Expect to see continued pressure in the regional banking space. “The acute phase of bank stress is clearly over, but in its wake several challenges have become exacerbated including funding challenges, balance sheet constraints, dampened loan demand, and potential negative credit migration as commercial real estate (CRE)] maturities are dealt with,” Wedbush analyst David Chiaverini wrote in a note. “We expect another underwhelming quarter for banks given the macro backdrop.”

Filed under: Economy | 5 Comments »

Vital Statistics:

Stocks are flattish this morning as the bond market re-opens after a long weekend. Bonds and MBS are up.

We don’t have a ton of data this morning, but we do have a lot of Fed-speak with Raphael Bostic, Neel Kashkari, Christopher Waller and Mary Daly all speaking today.

The weekend terrorist attack by Hamas had a muted impact on the US equity markets and is providing a flight to safety in the bond market. So far, it seems to be having an muted impact on oil prices. While international instability usually causes interest rates to fall, the strong labor market is the biggest factor and will probably remain so, especially after Friday’s big number.

The Mortgage Bankers Association, the National Association of Realtors and the National Association of Homebuilders sent a letter to the Fed, urging them take actions to support housing and the mortgage market. Increased uncertainty about monetary policy have pushed out MBS spreads and increased interest rates.

They point out that shelter accounted for 90% of the increase in consumer prices during the month of July and that the best way to attack housing costs is to help facilitate new home construction.

The consortium urges the Fed to commit to ending rate hikes and to stop letting its MBS portfolio run off until MBS spreads have stabilized. I suspect wide MBS spreads are due more to bond market volatility than to QT. MBS spreads weren’t materially different from historical levels during the era of QE, so I don’t see why QT (which is much smaller in scope) would matter. MBS spreads are being driven by bond market volatility, and I suspect an all-clear signal out of the Fed would go a long way towards stabilizing them.

Small Business Optimism slipped in September, according to the NFIB. This was the 21st consecutive month with the index below the historical average. Inflation and labor shortages were the biggest drivers of the decrease. Small Business owners were increasingly pessimistic about the outlook six months out.

Consumption remains strong as consumers spend on credit, while small business is dealing with a tight labor market: ” They raised labor compensation at record rates to keep workers and fill open positions which are at record high levels. To manage rising labor, energy, and other costs, they raised prices at record high rates and continue to do so, adding to inflation pressures. But they are investing in their firms at historically low rates, primarily because capital spending is financed from the bottom line, and profits have been squeezed by rising input and labor costs and regulatory compliance. Interest rates on their loans have more than doubled and financing is harder to get now.”

Chinese real estate developer Country Garden defaulted on a HK dollar denominated loan. Sales have collapsed, with the first three quarters of 2023 down 44% from the previous period, and September sales down a whopping 81%. The developer has $187 billion in liabilities.

IMO this remains the biggest black swan event in the financial markets. I find it highly unlikely that the world’s second biggest economy could have a Great Depression-esque real estate implosion without any negative credit consequences outside of its country. Western investors and banks will lose money, and that might be the catalyst for the Fed to cry uncle.

Housing sentiment remains dour, according to the Fannie Mae Home Purchase Sentiment Index. “Mortgage rates persistently over 7 percent appear to be deepening the malaise consumers feel about the home purchase market,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. “In fact, high mortgage rates surpassed high home prices as the top reason why consumers think it’s a bad time to buy a home, a survey first. Notably, the share of consumers expressing pessimism about homebuying conditions hit a new survey high in September, with 84% now indicating that it’s a bad time to buy a home.”

Filed under: Economy | 25 Comments »

Vital Statistics:

Global sovereign bond yield continue there relentless march higher, with the 10 year approaching 4.9% in the overnight session. We are seeing a bit of a reprieve this morning after the weak ADP print.

The bond sell-off is global, with the Japanese Government Bond yield breaking through 0.8% and the German Bund touching 3%.

The economy added 89,000 jobs in September, according to the ADP Employment Report. “We are seeing a steepening decline in jobs this month,” said Nela Richardson, chief economist ADP. “Additionally, we are seeing a steady decline in wages in the past 12 months.” Interestingly, we saw a decrease in professional / business services, which saw the biggest increase in job openings in yesterday’s JOLTS report. Pay growth for job stayers decelerated to 5.9% while pay growth for job changers decelerated to 9%.

Mortgage applications fell 6% last week as purchases fell 5.7% and refis fell 6.6%. The applications index hit the lowest level since 1996. “Mortgage rates continued to move higher last week as markets digested the recent upswing in Treasury yields. Rates for all mortgage products increased, with the 30-year fixed mortgage rate increasing for the fourth consecutive week to 7.53 percent – the highest rate since 2000,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “As a result, mortgage applications grounded to a halt, dropping to the lowest level since 1996. The purchase market slowed to the lowest level of activity since 1995, as the rapid rise in rates pushed an increasing number of potential homebuyers out of the market. ARM loan applications picked up over the week and the ARM share increased to 8 percent, as some borrowers searched for ways to lower their payments.”

Atlanta Fed President Raphael Bostic sees only one rate cut in 2024. “I am not in a hurry to raise, but I am not in a hurry to reduce either,” Bostic said Tuesday at an event in Atlanta, referring to the US central bank’s benchmark interest rate. “I want us to hold. I think that’s the appropriate thing to do, for a long time.” He has been one of the more dovish Fed Presidents.

A last-minute bipartisan budget agreement was reached over the weekend, which kept the Federal Government and the National Flood Insurance Program (NFIP) operating for another 45 days into mid-November.  While the NFIP has measures which prevent a true lapse in the case of a government shutdown, it is smart for lenders to understand how to address flood insurance in case a shutdown occurs. A lender can place the insurance application in the borrower’s file as proof and move forward with closing. Alternatively, lenders can purchase WYO of Private Flood Insurance. Pinnacle Property Data is a boutique vendor management company that specializes in flood certifications and offers flood certifications from ServiceLink National Flood. They work with many of the largest lenders in the industry to reduce costs on flood certifications and provide unique value add products for free. Pro tip: Have your loan officers get flood insurance requirement data for free and if flood insurance is required, get an instant quote here https://pinnacle.rocketflood.com/ . Now is the time to look at process improvements and efficiencies! Contact us today to see how we can save you money on your flood certification program! 602-561-6791 or sasha@pinnpropdata.com

The services economy expanded in September, albeit at a slower rate, according to the ISM Services Index. There has been a slight pullback in the rate of growth for the services sector, which is attributed to slower rates of growth in the New Orders and Employment indexes. The majority of respondents remain positive about business conditions; moreover, some respondents indicated concern about potential headwinds.” Employment growth decelerated, while pricing was flat on a month-over-month basis.

Filed under: Economy | 22 Comments »