Mortgage News Daily

There are two key, big picture home price indices in the U.S. They come out every month, but with a 2 month lag. That means we're getting September's prices today. The two indices are: S&P Case Shiller, which focuses on a smaller data set that tends to detect trends sooner, but also in a more volatile way FHFA, a U.S. government agency that ultimately captures about as many transactions as could possibly be captured, thus producing the broadest and most authoritative update on home prices. For this reason, it serves as the foundation for updating the annual conforming loan limit. What happened with September's data? The more volatile Case Shiller data declined by 0.3% in September while FHFA's broader data set showed 0.7% growth. These discrepancies aren't uncommon. Moreover, both are reflecting a mid-4% rate of appreciation in annual terms. What are the implications for conforming loan limits, and what even is a conforming loan limit (CLL)? The CLL is the highest loan amount that can be guaranteed by housing agencies Fannie Mae and Freddie Mac. Their guarantee allows for several advantages ranging from standardized automated underwriting capabilities to generally lower interest rates. There is a base loan limit, but some of the most expensive counties can be 150% of that limit. The previous loan limit was $766,550.

Even on a good day, the Census Bureau's New Residential Sales report has a notoriously wide margin of error. But today's 12.8% margin of error isn't even the best counterpoint to today's ostensibly alarming 17.3% month over month decline. After all, that would still be at least a 4.5% decline.

Monday brought a rare event for the bond market in the recent context as yields fell throughout the day and never really thought about bouncing. It was all the more uncommon because the rally was fairly large and it didn't come in response to a new long-term high in yields in the previous session. Now this morning, the gains are moderating ever so slightly. 10yr yields are still more than 10bps below last Friday's close, but up 2.4bps from yesterday. This is a fairly uneventful move and one that has little--if any--visible connection to new Trump comments regarding tariffs.

“If there's anyone out there who has no family and is planning to stay home alone this Thanksgiving, please let me know. I need to borrow some chairs.” Kind of cute… What isn’t cute is that the MBA has reduced its production forecast for 2025

Although there was a busier calendar of economic data today, mortgage rates are little changed after dropping at the fastest pace in several weeks to start the new week. Economic data is one of the main sources of motivation for the bond market which, in turn, influences day to day changes in mortgage rates.

While today's economic calendar was not necessarily "empty," it may as well have been in terms of market movement potential. Home prices came in hotter according to FHFA, but bonds never care about home price indices (apart from the housing meltdown, perhaps). Same story for new home sales which tanked due to Hurricane Milton. Consumer confidence and the 5yr auction were right in line with expectations, thus leaving only the Fed Minutes at 2pm. The Fed couldn't possibly have said anything interesting 3 weeks ago that we haven't already heard several of them say in the past 3 weeks. Therefore, it was never likely to inspire bond market movement. We're left with a modest correction to yesterday's rally and a day of mostly flat trading into the 3pm CME close. Wednesday could be a bit jumpier depending on the data and month-end trading uncertainty.

Although this morning contained the week's most active slate of economic data, it has completely failed to inspire even the most modest of responses in the bond market, both in terms of volume and volatility. Disclaimer: there is some chance of a reaction to the monthly PCE data which did not come out at 8:30am as it normally would and is instead rescheduled for 10am ET. Bonds were stronger overnight with most of the gains coinciding with the start of the European trading session (weaker data in Europe helping bonds). There's been no movement so far during domestic hours. Some traders are also pointing to month-end buying as a source of support for bonds over the past 3 days.

“Rob, my borrowers would be really happy with rates below 7 percent. When will we get there?” A wise economist with the MBA once told me, “If you’re going to give a number, don’t give a date. If you’re going to give a date, don’t give a number.” Probably early next year. If I could predict rates precisely, I’d be writing this from a sleepy village on a beach in Mexico. Depending on where the home is, maybe the focus should be more on obtaining homeowner’s insurance at a reasonable level. Everyone is talking about how delinquencies are following mounting insurance costs! Per

The interest rate market continues the healing process after taking heavy damage in October. During the course of that month, the average top tier conventional 30yr fixed rate increased more than 0.75% and broke above 7.0% for the first time since early July. The first few days of November saw some additional volatility with our rate index hitting 7.13% on November 6th.

Bonds were stronger overnight with 10yr yields hitting roughly 4.25% even before this morning's economic data came out. Now at the 3pm CME close, 10yr yields are still at 4.25% and they didn't stray too far from that midpoint in either direction. Data was neither friendly nor unfriendly and there was certainly no discernible reaction. We're left to chalk up the rally to serendipitous, temporary factors such as month-end trading, holiday weekend position squaring, and the proverbial skids being greased by a light liquidity environment. It was and always will be the plan to basically ignore market movement on Thanksgiving week and tune back in more attentively during jobs report week (i.e. next week). NOTE: we are not currently planning on scheduled commentary for this Friday's half day unless something momentous happens. Bonds will be open until 2pm ET.