Where R Rates / MBS Market Update
This will be my final morning update of the year. I take the final two weeks each year to refresh and get ready for the new year. I will be working, just not writing. See you next year!
YESTERDAYS D-DAY
As you can see from all the red the markets did not like what the Fed had to say yesterday. We got hit pretty hard. I would pay more attention to the 6% coupons vs the 5.5% coupons. The 5.5% coupons got hit a lot harder than the higher coupons which is closer to the rates that you are quoting on your rate sheets.
It was still a bad day for both bonds as well as stocks.
The economic projections which is what the Fed puts out to support their decisions equated to inflation likely a little higher for a little longer, GDP growing but not as good of a pace, unemployment up a tick and labor market doing well.
This prompted the expected .25% rate cut and the surprise was they expect only two rate cuts next year. That means higher for longer short term rates which of course stocks and businesses do not like.
For bonds we show a .1% increase in inflation year over year so fixed rate securities like mortgage bonds do not like the sound of higher inflation for longer. From the looks of the projections we are still getting to where we want to be. We are just taking an extra year to get there. As in 2027 to reach 2% inflation. Essentially they updated their projections from September and pushed everything out one year.
Anything that extends inflation for a longer period will hurt our markets and it did. They state they will continue to monitor data and adjust accordingly. This makes it very difficult on us as well as the markets to manage expectations.
Hang in there folks. Just another pump in the road. This too shall pass.
| YESTERDAY CONV 5.5% – DOWN 62 CONV 6.0% – DOWN 41 GOVT 5.5% – DOWN 53 GOVT 6.0% – DOWN 28 10 YR NOTE – UP 11 TO 4.51 DOW JONES – DOWN 1,123 |
| SO FAR TODAY CONV 5.5% – DOWN 6 CONV 6.0% – DOWN 9 GOVT 5.5% – DOWN 6 GOVT 6.0% – DOWN 6 10 YR NOTE – UP 6 TO 4.57 DOW JONES – UP 246 |
GREEN is GOOD for Rates – RED is BAD for Rates
Product & Guideline Highlights
This will be my final morning update of the year. I take the final two weeks each year to refresh and get ready for the new year. I will be working, just not writing. See you next year!
MORE FANNIE CHANGES
If you missed yesterday’s morning update make sure you read the changes I showed yesterday. You can find all of my morning updates at https://www.jackkeeler.net/ .
Today, we will continue on with the changes that will become effective January 11th, 2025 with new and re-submitted Fannie AUS runs via the new DU Version 12.0.
Although Mr. Cooper does not allow no credit scores on conventional YET. I still want to make sure you know what is available to you even if it is not through me if a lender does allow for no scores.
NO BORROWER HAS CREDIT SCORE BUT DOES HAVE ONE ACCOUNT ON CREDIT
No longer limited to primary residence. You can do primary, second or investment and up to standard LTV allowances for Fannie products.
NO BORROWER HAS CREDIT SCORE AND NO ACCOUNTS ON CREDIT
Only allowed for 1-4 unit primary residence. All borrowers must occupy the property. Only eligible on purchase and rate/term products.
Non-Traditional credit requirements still apply to above scenarios.
ONE BORROWER HAS A CREDIT SCORE AND ONE DOES NOT
Previously they were limited to 1 unit primary residence for purchase or rate/term.
These borrowers are now allowed on all occupancy and product types as in cash-out investment is allowed.
Reminder when the borrower with the credit score makes more than 50% of the qualifying income you do not need non-traditional credit for the no score borrower. If the no score borrower makes more than 50% then you do need non-traditional credit.
VALUE ACCEPTANCE LTV RATIO
The ability to receive a value acceptance (aka appraisal waiver) will be going from 80% LTV to 90% LTV.
The ability to receive a value acceptance + data report (aka desk review) will be going from 80% to 97% LTV.
As you can see, Fannie Mae is adapting to what is working and whose loans are performing. These are all great tweaks to allow more borrowers to qualify for more loans. It is a great way to start the new year. Make sure your borrowers and referral partners know. Also, make sure you go back and look at your denials to see if any may have an approve eligible in their future.
Jackism of the Day
This will be my final morning update of the year. I take the final two weeks each year to refresh and get ready for the new year. I will be working, just not writing. See you next year!
EYES ON THE PRIZE
As I write this it is about two hours before this morning update hits your emails.
Yesterday was one of those days. One of those days each one of us has had 100’s if not 1,000’s of times in our lives. It was a day where I took my eyes off the prize. I let my mission and my life be deterred by the things that were around me.
I allowed Mr. Cooper and Flagstar items frustrate me, clients annoy me, my wife bother me, my thoughts control me and my emotions lead me. Yesterday, my results were dictated by everyone and everything with the exception of me. I was the only one who did not have a say in my day yesterday.
I did not have a say because I was not the man I desire to be. I was the man that I settle to be when I give up, I give in and I let this world make my decisions for me.
I am sure you can relate to having one of these days, weeks, months or years. It takes the wind out of your sails from moving forward and instead you end up sitting there drained and empty of mission and purpose.
This morning as I lay awake in my bed waiting for 4:30 AM to come around I spent time creating that wind again. Looking back on the day and asking myself what in the world happened? How did that happen? What happened to my guard rails I put up to stop this from happening?
For me at least, I went to prayer. My prize is and always has been and always will be to love God and love others. You have heard it before. The #1 commandment of all time. Love the Lord your God with all your heart, with all your soul, with all your mind and with all your strength and love your neighbor as yourself.
That’s it. When you do that. There is nothing in this world that can deter you. When I don’t then everything in this world can deter me.
Whatever your mission is in life for you. Whether it is religious, moral, familial, economic or whatever makes you breath easy and live abundantly. Keep your eye on the prize my friends.
I have recovered and am in a good place yet again today as I do each morning. Preparing myself for battle with what we encounter each day. It is and shall be a good day just because we can. When we keep our eyes on the prize of who we are, who we desire to be and not give the world a foothold to deter us from our mission then we will prevail every time if done right.
One of the funny things about the great commandment is the order it puts the phrase in. It says Love the Lord your God with all your Heart, Soul, Mind then Strength. Notice it starts with the heart and ends with our strength. Most of us start with trying to do it ourself in our own strength.
It must start with the heart. That is what makes it genuine and real and true to ourselves. Our soul is what makes up who we are. What the heart directs as an orchestra in our lives. It embodies our personality, character, spiritual realm, it is who we are as a whole. Then once we have the heart and soul in line then we think with the mind and use our strength to carry out our mission.
As you go into today and as you finish out this year. Keep your eyes on the prize my friends and win the race that we call life. I look forward to writing all of you again in the new year. Merry Christmas and may God bless each and every one of you.
