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Mortgage Rates Surge Lower After Fed Announcement, But Not Necessarily Because of It

Today was “Fed day” and mortgage rates fell quite a bit.  So it must have been due to the Fed announcement, right?  

Not exactly…

The Fed helped, but more so by getting out of the way for a bond market that was already rallying.  Let’s talk about what all that means.

“Fed day” means that today was one of 8 scheduled announcements by the Fed regarding monetary policy.  At the simplest level, this just means they’ll announce a change or no change in the Fed Funds Rate.  The market didn’t expect a change today and it didn’t get one.   

Beyond the rate announcement, there’s also a press conference with Fed Chair Powell where the market can glean clues about future Fed moves.  Little changed there and Powell didn’t say anything materially different than his last public appearance.  Perhaps traders were concerned that some of the recent data would have the Fed thinking more about hiking short term rates and the positive reaction was akin to a sigh of relief.

Even then, it wasn’t really the Fed reaction that helped rates the most.  Mortgage rates improve when bonds rally and bonds rallied most sharply in the AM hours after a series of economic reports.  The data was either in line with expectations or weaker, and low rates love weak data.  

There was also a more detailed update from Treasury regarding auction amounts.  Treasury auctions determine the “supply” of a Treasury securities, and that supply has a critical impact on interest rate momentum.  It’s a bigger deal for Treasuries than for the bonds that dictate mortgage rates, but the two are very closely correlated.  

Even before the Fed announcement, the average mortgage lender was already an eighth of a point lower than yesterday.  That’s a big move for a single day.  As bonds continued to improve after the Fed, many lenders issued mid-day reprices, bringing the average down 0.19% from yesterday.

From here, it will be Friday’s jobs report more than anything else that has the power to add momentum to this move or to push back against it.  It all depends on whether it continues showing excess strength in the labor market or signs of deterioration. 

Source: mortgagenewsdaily.com

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Subprime racial disparities grew during 2007 at some of the nation’s leading banks and mortgage lenders, according to a new report released by Inner City Press and Fair Finance Watch.

The consumer watchdogs studied loans that are defined as high-cost, those with a rate spread of three percent over the yield on comparable Treasury securities on first mortgages, and five percent on second mortgages.

They then compared the number of high-cost loans extended to whites versus other minority groups such as African Americans and Latinos, as well as loan application success rate.

The study found that Chase subjected African Americans to higher-cost loans 2.44 times more frequently than whites, while Latinos wound up with costlier loans 1.60 times more than whites.

Interestingly, the percentage of Chase’s loans that were considered high-cost went up in 2007 to 20.96 percent of all loans from 19.28 percent a year earlier.

The numbers were even worse in Chase’s hometown of NYC, and in New Orleans more than 50 percent of mortgage applications submitted by African Americans were denied.

Bank of America and Countrywide extended high-cost loans to African Americans nearly twice as many times as to whites, and denied applications to Latinos about 1.5 times more frequently than whites.

In the Los Angeles metropolitan statistical area in 2007, Countrywide confined 18.91 percent of its African American borrowers to high cost loans over the rate spread.

Citigroup’s numbers were the worst when it came to purchase loans, with high-cost loans extended to African Americans 3.41 times more frequently than whites.

Data from a slew of other large banks, including Washington Mutual, National City, Wachovia, SunTrust, revealed similar disparities.

Take a look at the complete release here.

(photo: devnull)

Source: thetruthaboutmortgage.com

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Although both are certainly beloved, the Bluegrass State is known for more than the world-famous Kentucky Derby and Colonel’s fried chicken. As people from all over learn about the delightful weather and cost of living perks the state has to offer, Kentucky is changing at a rapid clip, while still holding onto everything that makes it special.

Kentucky average rent prices

Renters who don’t wish to drop thousands every month on housing would do well to consider Kentucky. The average rent price for a one-bedroom unit across the entire state is just $1,082. That’s down 1.1 percent over the last year. Emphasis on the word “average” – there are still plenty of cities in Kentucky that are even more affordable to call home, unlike, say, San Francisco or Boston.

The cheapest cities in Kentucky for renters

Looking for the best possible deal? We’ve done all the heavy lifting for you! Check out the 10 cheapest places to live in Kentucky, complete with average rent price and stats on how the rates have changed over the last year.

10. Louisville

  • Average 1-BR rent price: $1,108
  • Average rent change in the past year: +3.98%

Those who consider Kentucky fully country couldn’t be more wrong. Indeed, this largest city in the state has all the creature comforts a metro-seeker could want. But with enough warmth and beauty to rival anywhere else in the state. Found in the north-central area of the state, Louisville residents benefit from proximity to other major cities, like Cincinnati (1.5-hour drive), Lexington and Frankfort.

Not surprisingly, most people associate Louisville with its most famous event, the Kentucky Derby, held at Churchill Downs every May. It also hosts the Kentucky State Fair on an annual basis, complete with rides, games and still more equestrian/agricultural-based events to enjoy. Some things never change, though, and Louisville remains one of the world’s leading producers of tobacco and bourbon.

Currently, a one-bedroom apartment in Louisville rents for an average of just over $1,100 a month, an uptick of nearly 4 percent since last year. Although it’s not the cheapest place to live in Kentucky, it’s definitely one of them!

9. Florence

  • Average 1-BR rent price: $1,058
  • Average rent change in the past year: +10.22%

Close to the northernmost section of the oddly-shaped state, the city of Florence is more convenient to Cincinnati than it is to the vast majority of Kentucky’s big cities. In fact, at only a 20-minute drive from Cincy, Florence is actually a suburb of the big city. Because of this, it’s not too shocking that Florence is in the midst of a full-on growth spurt. Which is probably why rent prices have jumped more than 10 percent in the last year. Currently, Florence is the 8th largest city in Kentucky, with about 33,000 residents to its credit.

Even if you’ve never stopped in Florence, you’ve likely seen its most famous landmark along I-75 while driving through, the “Florence Y’all” water tower. Turfway Park is another popular local attraction, as the site of the annual Kentucky Derby prep race, the “Jim Beam Stakes.”

A one-bedroom unit in Florence rents at slightly over $1,000 a month. It seems poised to go higher if the more than 10 percent increase over the last year is any indication. Hopefully, it maintains its spot on the cheapest places to live in Kentucky.

8. Bowling Green

  • Average 1-BR rent price: $974
  • Average rent change in the past year: +18.04%

The city of Bowling Green really lives up to its name, thanks to the lush, vibrant landscape that makes up the area. Found in the southern section of Kentucky, Bowling Green is the third-largest city in The Bluegrass State. Its nearly 60,000 residents fall only behind only Lexington and Louisville. This is the first city on our list of the cheapest places to live in Kentucky to come in at under $1,000 per month in rent. However, it might not stay that way for long. Prices for a one-bedroom unit are up 18.04 percent since last year.

Bowling Green has a ton going for it, industry-wise, with a number of major employers calling the city home, including Fruit of the Loom/Russell Athletics, Camping World and General Motors’ Corvette assembly plant, among many others. Western Kentucky University and all of the educational/basketball opportunities it entails is another local gem. Bowling Green is also well-decorated, in terms of accolades. A couple of those include National Geographic’s “10 Best All-American Cities” list, its designation as “The Best Place to Live in Kentucky,” per MONEY Magazine, as well as Forbes’ “Top 25 Places to Retire.”

7. Fort Thomas

  • Average 1-BR rent price: $966
  • Average rent change in the past year: +2.43%

Smack on the southern bank of the Ohio River is the northeastern Kentucky city of Fort Thomas. This suburb only six miles south of Cincinnati is loaded with appeal, thanks to its active, engaged community and a full list of events. In particular, the weekly farmer’s market is a popular place to socialize, buy locally-sourced products and generally enjoy the atmosphere this lovely town has to offer. Currently, a one-bedroom unit averages $966 a month, a slight increase of 2.43 percent since this time last year.

Fort Thomas obviously has historical significance from a military perspective, as it was an induction center where men and women enlisted during World War I and World War II. The historic fort, now known as Tower Park, still stands! The Fort Thomas Military and Community Museum is a fabulous place to take a tour and learn more about the important role this city played during trying times.

6. Taylor Mill

  • Average 1-BR rent price: $960
  • Average rent change in the past year: 0.0%

It’s status quo for Taylor Mill, at least as far as rent prices are concerned. A one-bedroom rental averages $960 a month, the exact same as last year. With not quite 7,000 residents, Taylor Mill is a quaint community where everyone seems to know everyone else. Yet another Kentucky city near Cincinnati, Taylor Mill residents enjoy all the perks of the nearby metro, but with a quaint, country feel.

It’s also a sports lover’s paradise. Highlights of the area include the Bill Cappel Sports Complex, as well as a local youth softball facility. Close proximity to Northern Kentucky University makes it easy for residents to get that undergraduate or advanced degree near home.

5. Lexington

  • Average 1-BR rent price: $896
  • Average rent change in the past year: -2.73%

Just east of Louisville is the homey city of Lexington, which is next on our list of the cheapest places to live in Kentucky. Rent prices are down nearly 3 percent compared with last year, so a one-bedroom unit averages just less than $900 a month.

Also known as the “Horse Capital of the World,” Lexington is quintessential Kentucky. Experience the state in all its authentic glory via a distillery tour, zip-line trip or a milkshake and a snack at the historic Wheeler Pharmacy.

Lex also has a lot of culture to its credit, with a chic dining scene and active calendar at the Lexington Opera House. In fact, the dawn of the 19th century earned the city the nickname, the “Athens of the West,” thanks to its population stacked with forward-thinking intellectuals. As a result, there’s something for everyone in Lexington, no matter how wide and varied your tastes are!

4. Fort Mitchell

  • Average 1-BR rent price: $807
  • Average rent change in the past year: -0.82%

Rent prices dipped ever so slightly in the northern Kentucky city of Fort Mitchell over the last year, with a one-bedroom renting for just over $800. Yet another Cincy suburb, Fort Mitchell is the proud home of the landmark Greyhound Tavern, one of the most award-winning restaurants in the entire state. Those with a taste for the slightly odd can take in the sight of hundreds of ventriloquist dummies at the Vent Haven: Ventriloquist Museum.

Fort Mitchell is popular with young professionals and families, as it’s an easy commute but still surrounded by lots of fun things to enjoy. Restaurants and pubs sprinkle the area, plus there’s a ton of green space to take advantage of during the mild weather months.

3. Fairdale

  • Average 1-BR rent price: $771
  • Average rent change in the past year: +0.69%

Part of the Louisville metro area, the comparatively small city of Fairdale has a population of around 9,000 Kentuckians. Adventure-seekers can literally swing by the Zipline Kingdom in Jefferson Memorial Forest, which itself is the largest municipal urban forest in the country. At 6,500 acres, there are trails for hikers, bikers, horseback riders and so on. Plus, there are spots for camping, fishing and about anything else an outdoorsy person could want.

Fairdale’s surrounding areas are also pretty fun, with lots of wineries and distilleries to enjoy. There is plenty for the entire family to do, with the zoo, Speed Art Museum and Kart Kountry (the longest go-cart track in the world) just around the corner from Fairdale. At $771 a month for a one-bedroom unit, it’s ever so affordable to rent in this homey community, even if the price did go up slightly in the last year.

2. Southgate

  • Average 1-BR rent price: $631
  • Average rent change in the past year: +5.34%

Next to Fort Thomas near the Ohio border, Southgate falls well below the $700 a month rent threshold. A standard one-bedroom is $631 a month, despite the fact that the area saw a 5.34 percent rent increase over the last year.

There aren’t a ton of rentals to choose from in this itty-bitty community of only 3,800 residents, but those available in the historic neighborhood are quite charming. Established in 1907, the city is especially proud of its efforts to preserve green space and has been awarded Tree City USA designation every year since 2005. Southgate also has a fishing lake, park and active community center where people of all ages regularly congregate.

1. Henderson

  • Average 1-BR rent price: $538
  • Average rent change in the past year: +0.50%

Topping our list of the cheapest places to live in Kentucky is the city of Henderson. Yet another one on the banks of the Ohio River, this one flirts with the Indiana border. Home to Audubon State Park, this western Kentucky city is larger than many of the others on our list, with nearly 30,000 residents. Currently, you can find a one-bedroom apartment for an average price of $538 per month, an increase of only half a percent from this time last year.

That low, low price gets a renter access to plenty of fun stuff, as Henderson has a storied reputation for its events. For example, the W.C. Handy Blues and Barbecue Festival is held every June and is among the nation’s largest free music festivals.

Then, every July sees the Sandy Lee Watkins Songwriters Festival, full of acoustic performers from talented artists. Of course, August wouldn’t be right in this area of Kentucky without the annual Bluegrass in the Park and Folklife Festival, held right on Henderson’s picturesque riverfront.

Locals and visitors alike also love to enjoy the area’s outdoorsy options, like canoeing through the Sloughs Wildlife Management Area or a stroll through Atkinson Park Riverwalk for excellent views of the area’s wetlands. Don’t forget to hit Ellis Park Race Course for thoroughbred racing. They also have hilarious events like ostrich, camel and wiener dog races!

Kentucky fried affordability

Whatever size, scope or price point you’re looking for, there’s somewhere for you among the cheapest places to live in Kentucky. Bonus — there’s bound to be at least one KFC nearby when the fried chicken urge strikes!

Methodology

Rent prices are based on a one-year rolling weighted average from Apartment Guide and Rent.’s multifamily rental property inventory as of August 2023. Our team uses a weighted average formula that more accurately represents price availability for each unit type and reduces the influence of seasonality on rent prices in specific markets.

We excluded cities with insufficient inventory from this report.

The rent information included in this article is used for illustrative purposes only. The data contained herein do not constitute financial advice or a pricing guarantee for any apartment.

Source: rent.com

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If Data Stays in This Week’s Range, The Highs Are In

By:
Matthew Graham

2 Hours, 54 Min ago

If Data Stays in This Week’s Range, The Highs Are In

Friday’s weak jobs report and strong bond market reaction raise bigger questions than they answer.  Granted, it is very nice to answer the question of whether the gains over the past two days were justified, but now we have to wonder if this entire week is enough to inform a long-term rate ceiling.  Using our own advice about needing to see 2-3 months of similar data before drawing such conclusions, clearly it’s not enough.  If we could know that the next 2 rounds of big-ticket data would be similarly cool, the top is in for rates.  That’s still a big “if.”

    • Nonfarm Payrolls
      • 150k vs 180k f’cast, 297k prev
    • Unemployment Rate
      • 3.9 vs 3.8 f’cast, 3.8 prev
    • Earnings
      • 0.2 vs 0.3 f’cast, 0.3 prev
    • ISM Services PMI
      • 51.8 v 53.0 f’cast

09:35 AM

Slightly stronger overnight and now much stronger after jobs data.  MBS up a full point.  10yr down 15.5bps at 4.504.

11:32 AM

Off the best levels by roughly 3/8ths in MBS, but still up 5/8ths on the day.  10yr down 13.6bps at 4.527.

02:17 PM

No further losses in MBS.  6.0 coupons back up more than 3/4ths of a point.  10yr down 11.5bps at 4.554

04:48 PM

10yr yield drifting higher into the 5pm close, but still down 8.4bps on the day at 4.579.  MBS have been flatter with 6.0 coupons just 1 tick (0.03) off a 3/4 point gain.

 Download our mobile app to get alerts for MBS Commentary and streaming MBS and Treasury prices.

Source: mortgagenewsdaily.com

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The jobs report today which should move mortgage rates lower, demonstrates why it’s time for the Federal Reserve to land the plane. The labor market doesn’t show wages spiraling out of control as it did in the 1970s because the inflation data doesn’t look like anything in the 1970s.

We had a solid job openings print this week and jobless claims are still near historic lows. Today’s labor data isn’t the cleanest report with labor strikes in different sectors and we did get significant negative revisions. But, job growth is returning to its average pace. Remember, if we didn’t have COVID-19 and job growth stayed on trend with population growth from February of 2020, we easily should have between 157 million – 159 million total people employed, and today we are at 156,930,000.

From BLS: Total nonfarm payroll employment increased by 150,000 in October, and the unemployment rate changed little at 3.9 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in health care, government, and social assistance. Employment declined in manufacturing due to strike activity.

Here’s a breakdown of the jobs gained and lost in today’s report:

In this job report, the unemployment rate for education levels looks like this:

  • Less than a high school diploma: 5.8%
  • High school graduate and no college: 4.0%
  • Some college or associate degree: 3.1%
  • Bachelor’s degree or higher: 2.1%

Wage growth has been slowing down since January of 2022, which is a big slap in the face to everyone saying that wage growth can’t slow down unless people lose their jobs. Today’s 4.1% year-over-year growth data is lower than the 6% plus wage growth data we saw in January of 2022. 

The other labor data lines were fine this week: nothing is breaking, but put them all together, and the labor market is returning to normal. Job openings data is roughly at 9.6 million, but the quits percentage is back to pre-COVID-19 levels. That’s essential because the Fed doesn’t want people to quit their job for higher wages. Jobless claims rose more than anticipated, but this is historically low.

The 10-year yield has had a crazy week, heading lower before the jobs report as we can see below.

As I write this article, the 10-year yield is at 4.53%, and mortgage rates are heading lower! Softer labor data will send rates lower. Looking at the history of economic cycles, usually when the Fed is done hiking rates, bond yields head lower with mortgage rates. The Fed made a big mistake by being too hawkish in its October meeting, which sent bond yields (and mortgage rates) much higher and made policy more restrictive

Overall, the labor market is getting back to normal. This is why, for a long time, I have targeted that 157 million to 159 million level as the baseline level for job growth, reflecting the slower growth rate of our population. We had a global pandemic, which did not throw us back to the 1970s, and in time, we are returning to normal.

We don’t need to create a job-loss recession for some code of honor that doesn’t exist among Federal Reserve members, we just need to endure.

Source: housingwire.com

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The Consumer Financial Protection Bureau (CFPB) this week published a report analyzing state-level community reinvestment laws and ways they promote reinvestment activities for entities including mortgage companies.

The 32-page report features details about the ways state governments aim to ensure financial institutions’ lending, services and investment activities meet the credit needs of their local communities, including mortgage companies, credit unions and banks.

Seven states are primarily featured in the analysis, including Connecticut, Illinois, Massachusetts, New York, Rhode Island, Washington, West Virginia as well as the District of Columbia. The report found that those parts of the country largely followed the lead of the federal Community Reinvestment Act (CRA) in the decades following its 1977 passage.

The federal CRA has a much narrower focus on banks, while states have broader latitude to include other kinds of institutions in their own community reinvestment guidance, including nonbank mortgage companies, the CFPB explained.

“Banks now originate and hold a much smaller share of outstanding mortgage debt than they did when the legislation was originally enacted,” the CFPB said in an announcement. “In 1977, banks held 74% of outstanding mortgage debt. By 2007, this share had declined to just 28%. As of 2021, nonbank mortgage companies originated 64% of conventional home purchase mortgage loans, compared to the 25% originated by banks.”

The report includes five key findings, including details on how some states “apply an affirmative lending, service delivery, and investment obligation to mortgage companies, in addition to deposit-taking institutions.”

Some states also conduct independent performance examinations of lending, services and investments while other states include federal performance data alongside their own examinations. Certain enforcement mechanisms include limitations on mergers, acquisitions, branching and/or licensing. Some states go even further.

Certain states also go beyond the requirements of the federal CRA when evaluating lending, financial services or other investment activities in their states. State legislatures also change their CRAs depending on the realities of market conditions at a given time.

“The financial market has changed considerably since the passage of the Community Reinvestment Act, and nonbanks are now capturing a large share of the mortgage market,” said CFPB Director Rohit Chopra in a statement. “States have responded by creating reinvestment obligations for mortgage companies and have tailored state reinvestment requirements to meet the needs of their local communities.”

Source: housingwire.com

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The Financial Crimes Enforcement Network (FinCEN) released a follow up to their November 2006 mortgage fraud report yesterday, revealing a marked increase in suspicious activity reports, but also improved industry awareness.

From April 2006 to March 2007, 40,781 mortgage loan fraud SARs were filed, a 44.7 percent increase from the 28,174 filed a year earlier.

However, suspected fraud was detected prior to loan fundings in 31 percent of the mortgage loan fraud SARs filed during that time, compared to just 21 percent in the previous ten years.

While the numbers have improved, it’s clear that a large number of fraudulent loans are still slipping through the cracks, with many likely attributable to the originate to distribute model.

Reports of suspected identity theft in conjunction with mortgage loan fraud, such as deceiving a mortgage lender to obtain credit, increased 95.62 percent compared to the previous study.

The report also found that fraud tied to cash-out refinances surged nearly 1000 percent over the last five years and is expected to more than double between 2006 and 2007.

Additionally, suspected mortgage fraud cases involving stated income and low or no doc loans increased 69 percent from a year earlier.

In a random sampling of 1,769 SAR narratives, misrepresentation of income/assets/debts made up 43.02 percent of the SARs, forged/fraudulent documents accounted for 28.04 percent, and occupancy fraud occurred in 14.41 percent of the cases.

Appraisal fraud, identity fraud, straw buyers, identity theft, and house flipping were also evident in these samples.

Interestingly, mortgage brokers originated the loans reported on 58 percent of the SARs sampled for the report, serving as active participants or intermediaries that failed to verify borrower application information.

The top five subject address states were mortgage fraud SARs were reported were California, Florida, Illinois, Georgia, and Texas.

The report noted that the most effective time to detect fraud was during the underwriting process, stating that simple “reasonability checks” of income and occupancy could actually prevent most mortgage fraud.

(photo: kafka4prez)

Source: thetruthaboutmortgage.com