Mortgage Rate Intelligence & Market Updates

AGNT CEO said existing home sales could dip below 4 million in 2027 if mortgage rates top 8%

After 17 years of building the business, Sanford said AGNT can now run without his direct involvement

Lenders reduced offerings that allow for cash-out refinances and investor home purchases

Plan comes as lender ramps up cost-cutting efforts and pursues a sale of its U.K. bank subsidiary

“My friend is an EMT, and she’s amazing on trivia night. She’s usually the first responder.” The United States is full of trivia. Did you know that part of Florida is in the Central Time Zone? (Fourteen states are in more than one time zone!) Do you know what Brad Pitt, Tom Cruise, Kenau Reeves, and Michelle Pfeiffer have in common? They all can qualify for a HECM (aka, reverse mortgage)! Last time I checked, about 10k people a day turn 62; if you don’t have a HECM division, or a HECM product, your company should consider one. What isn’t so trivial are volumes in our biz, both in dollars and in units. KBW’s Bose George expects mortgage origination volume in 3Q to be down around 10 percent Q/Q. (Currently, the MBA is forecasting 3Q down 8 percent, Fannie Mae is forecasting -7 percent, and agency securitization volume was down 9.3 percent.) “We expect gain-on-sale margins to be flat to down modestly. However, sharp increases in rates can make pipeline hedging more challenging as fallout can come in lower than expected. We are reducing our estimates for the mortgage originators to incorporate these trends, and our forward estimates are also declining to reflect industry volume estimates for 2027.” Buckle up! (Today’s podcast can be found here. This week’s ‘casts are presented by Floify, the mortgage industry’s leading point-of-sale platform. Dynamic Apps, which can be seen at booth 600 during MBA Annual next week, lets lenders create fully customizable loan applications for any loan type, including HELOCs, construction, agricultural lending, non-QM and more, without custom development. Today’s has an interview with Gather Markets’ Wayne Brown on recurring challenges for banks and originators in finding, matching, and efficiently processing CRA-eligible loans, leading to Gather’s focus on using data, technology, and compliance infrastructure to connect the right loans with the right bank buyers.)

Bonds were initially moderately weaker this morning morning in a move that followed oil prices and hawkish Fed comments. Chris Waller said more hikes were needed due to a strong economy, persistently high inflation, and the risk that inflation expectations would become unanchored after 5.5 years above target. This hit the short end of the curve at 4:30am ET and brought Fed Funds Futures for the middle of next year back to yesterday’s levels. Oil prices were rising at the same time and were already pushing bonds higher (or the correlation is coincidental, and bonds just “felt like” correcting a bit). 
In the last few minutes, 10yr yields made it all the way back to unchanged for reasons unknown, although someone will try to tell you it had to do with Europe and the ongoing bond market volatility there. They’re wrong in this case even though Europe has been a factor on several recent occasions.
Now it’s time to play “name that line.” The following chart has 3 lines. One is the 10yr yield. One is oil. One is the implied yield for Fed Funds Rate in June 2027. See if you can guess which is which.  Well, nevermind. It doesn’t really matter, right? 

Seriously though, the “Waller” caption gives it away. The orange line has to be Fed Funds Futures because it’s not nearly as active as the other two (if you didn’t already know, there are far fewer trades in Fed Funds Futures than in bonds or oil). The blue line therefore has to be 10yr yields.  Well, it doesn’t HAVE TO be, but it’s much more likely to be because it moves with Fed Funds Futures whereas the red line does not (i.e. Fed rate outlook is more likely to correlate with the rest of the bond market than with oil prices). 

Hybrid eligibility is now in the high-90% range for some programs, expanding use cases ahead of Nov. 2