Mortgage applications decreased 6.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 29, 2023.

The Market Composite Index, a measure of mortgage loan application volume, decreased 6.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 6 percent compared with the previous week. The Refinance Index decreased 7 percent from the previous week and was 11 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 6 percent from one week earlier. The unadjusted Purchase Index decreased 6 percent compared with the previous week and was 22 percent lower than the same week one year ago.

“Mortgage rates continued to move higher last week as markets digested the recent upswing in Treasury yields. Rates for all mortgage products increased, with the 30-year fixed mortgage rate increasing for the fourth consecutive week to 7.53 percent – the highest rate since 2000,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “As a result, mortgage applications ground to a halt, dropping to the lowest level since 1996. The purchase market slowed to the lowest level of activity since 1995, as the rapid rise in rates pushed an increasing number of potential homebuyers out of the market. ARM loan applications picked up over the week and the ARM share increased to 8 percent, as some borrowers searched for ways to lower their payments.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) increased to 7.53 percent from 7.41 percent, with points increasing to 0.80 from 0.71 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added

Read More

Rising interest rates may threaten the “soft landing” outlook for the US economy, but the upcoming preliminary estimate of third-quarter GDP from the government still looks set to report that output picked up from Q2.

The median nowcast for GDP via several sources compiled by CapitalSpectator.com indicates growth at 3.2% for the July-through-September period (seasonally adjusted annual rate). That’s substantially up from the 2.1% advance in Q2.

But in a sign of what may be brewing, today’s revised Q3 nowcast is fractionally below the previous update. It’s reasonable to assume that more downside revisions are likely ahead of the Oct. 26, when the Bureau of Economic Analysis will publish its Q3 report for GDP. One factor weighing on the outlook for the remaining Q3 nowcasts: rising Treasury yields.

The recent runup in the 10-year yield lifted the benchmark rate to 4.81% on Tuesday (Oct. 3), the highest since 2007. “I think we’re gonna go to five [percent]” for the 10-year yield, predicts former Pimco bond fund manager Bill Gross.

Upside momentum for the 10-year yield is certainly strong lately. The 50-day average for the rate, after briefly falling below its 200-day counterpart in the spring, has recently rebounded, which implies that the market will continue to reprice this yield higher in the near term.

Meanwhile, Fed officials are signaling that interest rate cuts aren’t on the horizon. In fact, it’s premature to rule out another rate hike, advises Cleveland Fed President Loretta Mester. On Monday she said: “At this point, I suspect we may well need to raise the fed funds rate once more this year and then hold it there for some time as we accumulate more information on economic developments and assess the effects of the tightening in financial conditions that has already occurred,”

Jim Bianco, president of Bianco Research, tells CNBC: “I don’t think we’re near the end of this move in the bond market.”

Higher interest rates are a new headwind for the economy in Q4 and beyond. There’s also a risk that today’s 3%-plus nowcast for the upcoming Q3 report will be revised down ahead of the Oct. 26 release. Given the recent persistence in higher nowcasts vs. Q2, however, it’s likely that growth will match or exceed the previous quarter. But the longer that interest rates rise and/or hold on to current levels, the stronger the case for revising current growth estimates down for Q4.

How is recession risk evolving? Monitor the outlook with a subscription to:
The US Business Cycle Risk Report

Read More

As Eli Lilly anticipates an FDA weight-loss approval for its in-demand diabetes drug Mounjaro by year’s end, the drugmaker’s leader of those two areas will retire and be replaced by its immunology head.

Mike Mason, president of Lilly Diabetes and Obesity, will depart at the end of December after a 34-year career at the Indianapolis-based Big Pharma, per a Wednesday morning announcement. Lilly USA president and immunology president Patrik Jonsson, another three-decade veteran of the company, will take Mason’s place on Jan. 1.

Meanwhile, one of the drugmaker’s key decision makers is being handed additional duties. Science chief Daniel Skovronsky, who joined in 2010 via Lilly’s acquisition of his company Avid Radiopharmaceuticals, will take over Jonsson’s immunology role, which entails overseeing commercial and Phase III medicines in dermatology, gastroenterology and rheumatology. The company has received two complete response letters from the FDA in this area in 2023: the eczema drug lebrikizumab and ulcerative colitis drug mirikizumab. Both cited manufacturing issues as the reason.

And the C-suite will gain a chief medical officer as David Hyman expands his remit from a focus on oncology by way of Lilly’s $8 billion acquisition of Loxo Oncology in 2019. Chief consumer experience officer Jennifer Oleksiw will become global chief customer officer. The company also recruited Mark Genovese from an SVP role at Gilead Sciences to become its SVP of immunology development. Lilly’s EVP of corporate affairs and communications, Leigh Ann Pusey, is departing at the end of 2023.

“As we embark on this exciting new chapter of growth for our company, I’ve never been more confident about our ability to deliver life-changing medicines to the patients who need them,” Lilly CEO David Ricks said in a statement.

Read More