In the day just passed, bonds endured whipsaw volatility of the highest and most frustrating order.  Overnight gains were swift and largely defied any rational explanation other than the generic "tradeflows" platitude.  The notion of short-covering or a short-squeeze due to an imbalance of traders betting on a bounce after Tuesday's rally is also plausible, as is the contribution from a strong move to record low yields in the EU overnight.  Perhaps it was a combination deal.  We'll never know.  Either way, it didn't last.  After European markets closed, bonds brutally erase all of the overnight gains (a fact that adds some credence to the European explanation). In the day ahead, bond traders will look around the metaphorical room at other bond traders and ask each other "is it over?"  In other words, is the rally over?  Any rally at any time could ALWAYS be over.  There have been times over the past 9 months where the answer was far less likely to be "yes," but there was still no way to know with certainty.   The range of probabilities surrounding any such answer is far FAR smaller than most market watchers understand.  I suppose I can only truly speak for myself, but I would remind anyone that if a strong probability of a big move could actually exist, traders would position for it ahead of time, thus taking the range of probabilities back to something like 50% ± ~5%.  I don't know about you, but I wouldn't take much risk based on a 55% chance. The best bet is not only to understand that it could always be over, but also that the longer it goes on, the bigger the risk becomes of a more sustained bounce.  These bounces don't need to be especially painful (especially if we get one like 2011, which ultimately gave way to an epilogue of a rally), but it is something we increasingly need to prepare for.  Fortunately, as long as it's not too vicious, a bit of a bounce would be a welcome development for most originators and mortgage lenders right now.

August 8, 2019 Download our Mobile App: Download our Mobile App: 30 Yr. Fixed 6.15% -0.02%   6.01% 7.13% 15 Yr. Fixed 5.72% -0.03%   5.55% 6.5% 30 Yr. Jumbo 6.33% -0.02%   6.1% 7.45% Compare Mortgage Rates from Local Lenders for Aug 8, 2019 No, Mortgage Rates Are No Longer "Sharply Lower" This Week! Thu, Aug 8, 2019 4:22PM Mortgage rates were sharply higher today, with the average 30yr fixed rate quote rising by almost an eighth of a percentage point in some cases. A move of that magnitude in one day is the sort of thing that only happens a few times a year. Surprisingly, a multitude of headlines claim that rates are sharply LOWER this week. What gives?! If you happened to catch yesterday's rate commentary , you already know where this is going. There's an over-reliance on the part of major media outlets (and even in some corners of the mortgage industry itself) on the weekly mortgage rate report from Freddie Ma... (read more) Mortgage News Daily Rate Change Points 30 Yr. Fixed 6.15% -0.02 0.00 15 Yr. Fixed 5.72% -0.03 0.00 30 Yr. FHA 5.75% -0.05 0.00 30 Yr. Jumbo 6.33% -0.02 0.00 7/6 SOFR ARM 5.56% -0.03 0.00 30 Yr. VA 5.77% -0.04 0.00 Updates Daily - Last Update: 2/6 Freddie Mac Rate Change Points 30 Yr. Fixed 6.11% +0.01 0.00 15 Yr. Fixed 5.50% +0.01 0.00 Updates Weekly - Last Update: 2/5 Mortgage Bankers Assoc. 30 Yr. Fixed 6.24% +0.08 0.55 15 Yr. Fixed 5.64% +0.09 0.61 30 Yr. Jumbo 6.34% -0.05 0.40 Updates Weekly - Last Update: 1/28 UMBS 30YR 5.0 100.05 +0.01   95.71 100.50 UMBS 30YR 5.5 101.49 +0.04   98.11 101.64 10 YR Treasury 4.213 +0.033   3.932 4.608 MBS Live Day Ahead: It Could Always be "Over" Thu, Aug 8, 2019 10:33AM In the day just passed, bonds endured whipsaw volatility of the highest and most frustrating order.  Overnight gains were swift and largely defied any rational explanation other than the generic "tradeflows" platitude.  The notion of short-covering or a short-squeeze due to an imbalance of traders betting on a bounce after Tuesday's rally is also p... (read more) MBS Price Change UMBS 4.5 98.06 +0.03 UMBS 5.0 100.05 +0.01 UMBS 5.5 101.49 +0.04 GNMA 4.5 97.84 +0.10 GNMA 5.0 100.18 +0.11 GNMA 5.5 101.22 -0.02 Pricing as of: 2/7 4:28AM EST US Treasury Yield Change 2 YR Treasury 3.496 +0.044 5 YR Treasury 3.753 +0.036 7 YR Treasury 3.965 +0.026 10 YR Treasury 4.213 +0.033 30 YR Treasury 4.851 +0.006 Pricing as of: 2/7 4:28AM EST Other News Home Purchase Sentiment Hits Record High Thu, Aug 8, 2019 8:28AM There was an unusually large bump in Fannie Mae's Home Purchase Sentiment Index (HPSI) in July. The company said strong positive responses to questions on the National Housing Survey (NHS) about job security and interest rate declines sent the index up 2.2 points compared to June. The HPSI, at a 93.7 reading, is up 7.2 points compared to the same time last y... (read more) Home Price Picture Grows More Complex Thu, Aug 8, 2019 8:19AM Anyone trying to make sense out of current data on the direction of home prices needs more than a calculator. Every new report seems to dump more mud in the water, show price growth slowing, stabilized or driven higher by falling interest rates. This is understandable given the two-month lag-time of most price indices, but Wednesday's slightly more timely re... (read more) Patch Expiration Will Hit Low Income and Minority Borrowers and Neighbors Wed, Aug 7, 2019 10:24AM CoreLogic has been running a series of articles in its Insights blog attempting to quantify the potential impact of the expiration of the so-called GSE Patch. The Patch provides an exception to the 43 percent debt-to-income (DTI) ratio limit of the Qualified Mortgage (QM) rule for loans that are eligible for purchase or guarantee by one of the government spo... (read more) Credit Products; Vendors Raising Money and Offering Free Appraisals Thu, Aug 8, 2019 9:06AM Are there “non-profit” lenders and/or real estate companies in the private sector? (I’m talking business model, not tax status.) Sure there are. Here’s a quick example: Homewise in New Mexico . But in my talks with lenders around the nation, profit is the name of the game, and non-bank lenders are always watching bank and credit union... 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