Inflation data pushes mortgage rates lower

Plus: Fannie Mae announces key leadership changes

November 15, 2023

Good morning! This is Mortgage Nuggets; we make sure you’re ready when you walk out of the tunnel for game day. Which in this industry, is every damn day.

Disclaimer: Average mortgage rates as of Nov 14, 2023. © MND's Daily Rate Index.

1. Core CPI hits two-year low

Inflation eased in October and price increases showed encouraging signs of slowing under the surface, according to fresh data released on Tuesday. The report provides the Federal Reserve with evidence that its battle against rapid inflation is working.

The overall Consumer Price Index slowed to 3.2 percent last month on a year-over-year basis, lower than the 3.7 percent reading in September and the coolest since July. Excluding volatile food and energy prices, the core CPI rose 0.2% and 4%, against the forecast of 0.3% and 4.1%. The annual rate was the smallest increase since September 2021.

2. Inflation data pushes mortgage rates lower

The average rate on the 30-year mortgage fell 18 basis points to 7.40% on Tuesday, according to Mortgage News Daily, as Wall Street lowered its expectations for future Federal Reserve hikes.

The drop was due to a sharp bond market rally, after the government’s monthly inflation report came in lower than analysts had predicted. As bond yields fell, so too did mortgage rates, which loosely follow the yield on the 10-year Treasury.

“Even though today’s inflation data was extremely important in shaping the rate narrative, the bond market’s reaction is nonetheless impressive,” said Matthew Graham, chief operating officer at Mortgage News Daily. “Mortgage lenders have done a great job of keeping pace with market movement considering mortgage rates are often accused of taking the elevator up and the stairs down.”

3. Catch up quick

👫 This couple was so miserable with a 2.5-hour super-commute, they took on an extra $1,200 monthly mortgage payment: ‘We’d do it again in a heartbeat’. (Fortune)

📌 CoStar Group founder and CEO, Andy Florance, discusses with CNBC the state of the real estate market, commercial real state trends, and the impact of the $1.8 billion broker fees ruling verdict. (CNBC)

🏦 The banking industry and many Republicans in Congress have mobilized against the new capital rules. Learn more about what these rules are and why opponents say they will constrain lending and hurt lower-income borrowers. (FSF)

🪄 This interactive map shows Zillow’s latest home price forecasts for the nation’s 400 largest metro-area housing markets. Just hover over. (ResiClub)

Outside interests: How Wall Street makes millions selling car loans customers can’t repay. Lenders profit while borrowers buckle under debt charging as much as 29.99% interest. (Bloomberg)

4. Old Republic exits mortgage insurance space

Old Republic, a Big Four title firm, has decided to divest its run-off mortgage insurance business to Arch MI. The definitive agreement involves Arch MI acquiring all the capital stock of RMIC Companies, a wholly-owned subsidiary of Old Republic, including its subsidiaries.

The sale is valued at around $140 million, and Old Republic anticipates receiving an additional $25 million as a final dividend for the fourth quarter. The transaction's closure, subject to regulatory approval, is expected in the first half of 2024.

"We are pleased to announce this definitive exit from the mortgage insurance business. Since placing this business in run-off in 2011, we have been able to preserve significant value for shareholders."

Old Republic President and CEO Craig Smiddy said.

5. Mr. Cooper faces a class-action suit over cyberattack

Mr. Cooper Group is facing multiple class-action lawsuits after the cyberattack compromised customer data and disrupted its systems. The Dallas-based mortgage servicer and lender, with 4.3 million customers and a $937 billion portfolio, reported unauthorized access to its technology and customer data on October 31.

Plaintiffs in the Texas district court lawsuits claim Mr. Cooper failed to protect personal information adequately, leading to heightened risks of identity theft and financial burdens for protection measures. They also criticized the company for delayed and inadequate communication about the breach, emphasizing long-term risks and emotional stress.

6. Fannie Mae announces key leadership changes

Fannie Mae President David Benson plans to retire from the company next year after more than two decades with the government-sponsored mortgage company.

Chief Executive Priscilla Almodovar will take on the additional title of president following Benson's departure, which is expected by mid-2024. Almodovar will directly manage Fannie Mae's two business units: single-family and multifamily.

In addition, Fannie Mae said that Chief Administrative Officer Jeffery Hayward plans to retire at the end of this year. General Counsel Terry Theologides will succeed Hayward in that role.

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