Morning Report: A slew of mortgage banking earnings

Vital Statistics:

S&P futures3,73049.75
Oil (WTI)92.314.02
10 year government bond yield 4.12%
30 year fixed rate mortgage 7.14%

Stocks are higher after the jobs report. Bonds and MBS are up.

The economy added 261,000 jobs in October, which is more or less what we added in September. The unemployment rate ticked up to 3.7% from 3.5%, an indication that the Fed’s tightening is beginning to have some effect on the labor market. The labor force participation rate ticked down to 62.2%. Average hourly earnings rose 0.4% MOM and 4.7% YOY.

Rocket reported third quarter numbers. Volumes were down again – 26% QOQ and 71% YOY – to $25.6 billion. Gain on sale and earnings were again supported by servicing. The company is guiding for volume to slow again in Q4 (though seasonality is playing a part) to a range of $17 to $22 billion.

UWM reported third quarter earnings. Volumes increased from $29.9 billion to $33.5 billion. Gain on sale margins fell from 99 bps to 52 bps, but net income rose QOQ.

Guild Holdings reported Q3 numbers. In-house origination volumes were down 23% QOQ, however net income increased. Gain on sale margins were flat.

Freddie Mac is adjusting the way it calculates rates in its Primary Mortgage Market Survey. Freddie believes that its methodology contains sampling bias and it is working to fix that. FWIW, Freddie’s PMMS numbers have been a sticking point with borrowers and loan officers: “Freddie says rates are X% and we aren’t offering anything close to that!”

It sounds like Freddie will be using loan application data going forward instead of a survey. The biggest impact will be that points and fees will no longer be included in the rate data.

For those wondering, in the Morning Report, I use data from Optimal Blue to get the prevailing mortgage rate.

TIAA is getting out of the banking business. It will be selling TIAA Bank (which used to be known as Everbank) to a consortium of private equity funds and Bayview. The new name will be revealed soon.


Author: Brent Nyitray

In the physical sciences, knowledge is cumulative. In the financial markets, it is cyclical

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