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A pool of private student loans, provided to borrowers through the Iowa Student Loan Liquidity Corp., will secure $160.9 million in revenue bonds through series 2025A and 2025B.All the senior notes are fixed, according to S&P Global Markets, with the two, taxable series A notes maturing on Dec. 1, 2035 and Dec. 1, 2045. The seven tax exempt notes, which are all rated AA, have expected final maturity dates ranging from Dec. 1, 2030 through Dec. 1, 2045.RBC Capital Markets is the lead underwriter, according to the rating agency.The bonds benefit from credit support ranging from 20.3%-21.4%, based on stressed, break-even cash flow scenarios, says S&P, which it says provides coverage of about 5.1x-5.5x of its expected net loss of approximately 3.9%.Initial senior and total bond parities amount to 127.9% and 119.0% respectively, the rating agency said. The reserve account equals 2.0%, or $11.2 million, of the transaction's initial bond balance at closing, and must remain at the 2.0% of the current bond balance.The reserve target will increase to 5.1%, if on Nov. 30, 2025 the cumulative amount of loans originated with amounts deposited to the acquisition account at closing is less than $13 million. That condition is only temporarily in place until Dec. 1, 2027, when it will return to 2.0%, S&P said.The Iowa Student Loan pool has a total current balance of $492.5 million, and $15 million in total accrued interest. The 28,207 loans represent 18,268, with an average balance per loan of $17,463, according to S&P.Most of the pool, 68.6%, is in the repayment phase, while 19.1% of the loans in the pool are in deferment. Slightly more than one third of the pool, 31.5%, is not in repayment, S&P said. After that, loans that have started repayment between 37 to 48 months account for 22.6% of the pool, the next largest group.

Among the nation's 50 largest metro areas, half, primarily in the north and east, had annual home price increases in July, while the others are reporting downturns, Zillow found.Nationwide, year-over-year home price appreciation was a meager 0.2%. While this helped to marginally improve affordability, with average monthly mortgage costs down $19 over the past year, it is still nearly $1,000 per month more than prior to the pandemic, Zillow calculated."Perhaps more than ever, whether it's a good time to buy depends on where you live," said Kara Ng, senior economist at Zillow, in a press release. "A defining trait of this market is that buyers are gaining leverage that most of them can't use, because cost barriers are too high."The typical home value is $367,695, with a typical mortgage payment at 80% loan-to-value ratio at $1,907. This compared with $367,369 in June.Which cities are good for home buyers?Out of the 50 markets ranked, only seven are considered favorable to buyers: Miami; Atlanta; Tampa, Florida; Austin, Texas; Jacksonville, Florida; Memphis, Tennessee; and New Orleans. Out of the top 50 metros, 27 are considered to be in the buyers' favor or neutral. This is up from 24 in June.San Francisco leads the five strong sellers' markets, followed by Providence, Rhode Island; Milwaukee; Hartford, Connecticut; and Buffalo, New York.Meanwhile, nationwide, sellers cut their prices on 27.4% of listings during July, which is the highest share since Zillow began tracking this metric in 2018. In June, the share was 26.5%.Reductions were more common in the South and Mountain states. But in the Northeast and on the West Coast, they were not as widespread, Zillow said.What was the increase in days from listing to sale?Homes which sold in July, did so in an average of 24 days in July, six days slower than in 2024, although just one day longer than prior to the pandemic.However, Zillow noted that the median lifespan of all listings on its site was 60 days for the month, four more than the pre-pandemic average; Zillow started collecting this data in 2018.A separate report from Redfin, put the time a typical home went from listing to contract as 43 days for July, up from 35 days one year earlier. It is the longest timespan for any July since 2015.Pending home sales fell 1.1% month-over-month to the lowest seasonally adjusted level since November 2023, Redfin said. Existing-home sales ticked down to a seasonally adjusted annual rate of 4.15 million units, which it said was the lowest level in nearly a year."Supply is starting to fall because prospective sellers are choosing not to list after seeing their neighbor's home linger on the market or sell for below the asking price," said Redfin Senior Economist Asad Khan in a press release. "Some existing sellers are also pulling their homes off the market, opting instead to rent their house out or hold off on a move altogether — especially if they bought at the peak of the pandemic market and are worried about taking a loss."Redfin's data found median home sales prices increased 1.4% annually in July to $443,867; this is the highest dollar amount for the month on record. This was up from a 0.9% annual increase in June and 0.7% for May and a turnaround from shrinking prices at the start of the year.Home prices decline from June to JulyFirst American Data & Analytics' own Home Price Index for July found prices rose by 1.5% annually in July, the slowest pace since March 2012. Between June and July, prices were down by 0.2%; this followed a revised 0.2% decline between May and June."It's back to reality for national house price appreciation, as limited affordability, economic uncertainty and homeowners unwilling to enter the market and give up their low mortgage rates hinder demand amid a growing inventory of listings," said Mark Fleming, chief economist at First American, in a press release.Annual price growth slowed for the eighth straight month as the supply versus demand dynamic continued to shift, he continued.First American is seeing similar regional variations as Zillow is."Whether a market is gradually shifting towards a buyer's market or remains firmly in sellers' market territory depends on which side of the local supply demand tug-of-war is gaining momentum," Fleming added.

Fannie Mae and Freddie Mac look like they would hold up better in a severe downturn today than their collective stress tests indicated in 2024.The tests modeled how they'd fare after absorbing losses like a total $36.1 billion provision in net chargeoffs plus foreclosed property expenses. That shows the credit losses they'd be likely to face is closer to the $35 billion calculated in 2023 than the $41.9 billion modeled in 2024.Even after certain other negative line items beyond credit losses such as mark-to-market adjustments for securities, this year's tests found that Fannie and Freddie combined would have $8.5 billion in total comprehensive income in a downturn, compared with the $4.2 billion in 2024.The tests did also note that the GSEs would face a $6.8 billion loss when an allowance for deferred tax assets (DTA) is included, but this also marked an improvement from a year ago. In 2024, the GSEs' stress tests modeled a combined comprehensive loss of $12.8 billion on this basis. The Dodd-Frank Act stress tests include figures that account for DTA allowances because a downturn like the one that forced Fannie and Freddie into conservatorship could impact the value of these future tax benefits. The GSEs have re-established solid profitability since then.Fannie and Freddie's results may draw added attention this year amid talk of potential reforms to both the GSEs and broader stress tests, with the Trump administration recently hinting it could pursue a public offering for the pair.What Fannie and Freddie's individual results look likeFannie Mae's total comprehensive numbers both with and without the DTA adjustment improved, but it's still recording a loss when the allowance is included that made the combined total for both GSEs in that category negative.With the allowance for DTAs, Fannie would incur a $7.2 billion accounting loss, according to this year's stress test. That number represents a reduced loss when compared with $15.6 billion in 2024.Fannie would generate a positive $4.3 million in TCI in a severe downturn without a deferred tax asset adjustment, according to the stress test results this year. In comparison, last year's stress test showed it would record a total comprehensive loss of $1.1 billion on this basis.Freddie's TCI has been positive the last two years with or without the deferred tax asset adjustment, but numbers for income were lower than they were in 2024.Total comprehensive income in a severe downturn was $4.2 billion with the allowance excluded or $400 million with the DTA adjustment. Those numbers were down from $5.3 billion and $2.8 billion a year ago, respectively.More details on other potential losses in a downturnBoth GSEs saw reductions in the percentage of their average portfolio balance credit losses would represent when calculated over a nine month planning horizon. Fannie's dropped to 0.35% from 0.49%, and Freddie's fell to 0.58% from 0.61%.In addition to credit provisions, the stress tests consider various losses on securities and derivatives that could occur in a downturn, which totaled $7.4 billion at Freddie and $5.5 billion at Fannie. These numbers were respectively $2.9 billion and $6.6 billion last year.These losses and other smaller ones, in addition to a tax adjustment, are subtracted from pre-provision net revenue to calculate the total comprehensive numbers.

Russell Vought, director of the Office of Management and Budget (OMB) nominee for US President Donald Trump, speaks during a Senate Budget Committee confirmation hearing in Washington, DC, US, on Wednesday, Jan. 22, 2025. The Senate Budget Committee will have to approve Vought's nomination before he receives a full Senate confirmation vote, after the Senate Homeland Security and Governmental Affairs Committee voted 8-7 to advance Vought's nomination on Monday. Photographer: Al Drago/BloombergAl Drago/Bloomberg WASHINGTON — The Office of Management and Budget has apportioned a fraction of the money the Congress allotted to the Community Development Financial Institution Fund, documents show. OMB has allotted only $35 million under the Trump administration to the CDFI program, according to new apportionment documents. All of those funds have gone to cover administrative costs rather than awards from the program fund. That means that OMB has apportioned no discretionary awards to banks or other financial institutions for the fiscal year, which ends in a little over a month on Sept. 30. Funds for various CDFI programs are on a two-year cycle, so unlike many programs, the money doesn't expire at the end of the fiscal year.Still, the delay for the Bank Enterprise Award program and the other 10 programs under the CDFI Fund umbrella is unusual and problematic for the institutions that rely on those awards, and there's no sign that the program is going to be kicked back into gear. The Bank Enterprise Award Program, for example, has still has not received a notice of funding availability, a delay that could result in no awards this year, considering the long process of disbursing the funds. "All of this tells us what we already suspected, which is that OMB has not approved any apportionments for discretionary awards using funds provided in FY25," said a spokesperson for Sen. Mark Warner, D-Va. Warner is the co-chair of the CDFI Caucus in Congress, alongside former Senate Banking Committee Chairman Mike Crapo, R-Idaho. Crapo's office did not return a request for comment.The fate of the CDFI Fund has been uncertain since President Donald Trump signed an executive order earlier this year that aimed to dismantle the program, which has generally enjoyed bipartisan support in Congress. The executive order demanded the dissolution of the program to the extent allowed by law. Although the Treasury Department has said that the entire CDFI Fund is statutorily mandated, that hasn't stopped OMB from withholding the funds. The OMB is led by director Russell Vought, who is also the acting head of the Consumer Financial Protection Bureau and who was a leading proponent of the Heritage Foundation's Project 2025 governing blueprint. The CDFI case highlights a core constitutional conflict over Congress' power of the purse at play in Washington under the Trump administration. Vought and OMB have maintained that the administration can withhold money that Congress has appropriated, while lawmakers — even some Republican lawmakers like Crapo — have maintained that only Congress can decide what programs should be funded. "To date, the CDFI Fund has yet to announce and disburse awards for five programs within its portfolio even though application periods closed months ago," Crapo, Warner and a large group of bipartisan senators said in a letter to OMB last month. "Furthermore, other programs have yet to publish applications for the current fiscal year."OMB Director Vought has previously advocated for so-called "pocket recessions," a rarely used procedure that would allow the president to propose spending cuts late in the fiscal year when Congress has insufficient time to review them. Vought has said the administration intends to use such tools to achieve savings without legislative approval.

A California regulator is fining the defunct Caliber Home Loans $1.8 million for overcharging borrowers, an issue stemming from an examination almost a decade ago. The former lender, which was purchased by Newrez in 2021, has also refunded over $550,000 to impacted California borrowers, according to a press release Monday. The California Department of Financial Protection and Innovation also revoked Caliber's state origination licenses as part of the $2.3 million total settlement. "This penalty holds Caliber accountable and returns interest to California borrowers," said DPFI Commissioner KC Mohseni in a press release. "It is an example of DFPI's strong regulatory oversight in California's mortgage industry and its commitment to protect California consumers." States have steadily ramped up industry enforcement this year with the Consumer Financial Protection Bureau in limbo. The California fine follows a $2 million Massachusetts settlement with a servicer earlier this month, and various other laws and rulemakings.It's unclear if the settlement funds are coming out of Newrez's coffers. Neither an attorney for Caliber named in the settlement, nor a spokesperson for Newrez parent Rithm Capital responded to immediate requests for comment Monday afternoon. What did Caliber Home Loans do?In a 2016 examination California regulators found Caliber improperly charged borrowers excess per diem interest for more than 1 day prior to the disbursement of loan proceeds, according to the settlement. The DFPI ordered Caliber to self-audit its per-diem charges in 2019, and the originator found it overcharged 4,912 loans between 2012 and 2019 by a combined $550,316.46.The company has made refunds on those loans including 10% interest per annum, according to the state. Caliber also failed to establish a custodial account for borrowers' trust funds, but corrected that issue before the exam ended in 2018. Another 2020 examination found five more borrowers whom Caliber overcharged per diem interest.The lender reached an agreement with regulators before a trial was set to begin next week, the settlement stated. Separately in 2020, Caliber agreed to provide $17 million in mortgage loan forgiveness to New York customers after the New York attorney general accused the firm of placing customers in unfair, interest-only loan modifications. Caliber's origination licenses across the country expired in 2024, according to Nationwide Multistate Licensing System records. New Residential paid $1.67 billion to acquire Caliber from private equity firm Lone Star Funds in April 2021. Six months earlier, Caliber announced it was delaying an initial public offering, during the height of the refinance boom. The shop was primarily a retail lender, although it had a mix of direct-to-consumer, correspondent and wholesale business. It generated $3.5 billion in origination volume in 2023 and a massive $71.4 billion in 2021, according to Home Mortgage Disclosure Act data.

I got to thinking the other day that absent bad jobs numbers, it will be difficult for mortgage rates to move much lower anytime soon.Arguably, they got to where they are today (~6.50% for a 30-year fixed) due to a very weak jobs print, helped on by major downward revisions.Without that report, mortgage rates would likely still be on the higher end of 6%, closer to 7%.Here’s the problem though; after that bombshell report, President Trump dismissed Bureau of Labor Statistics (BLS) commissioner Erika McEntarfer.So it kind of makes you wonder if jobs data will be reliable/sugarcoated or even available for the foreseeable future, which would make it difficult to have any bearing on mortgage rates.Can We Trust the Jobs Data Moving Forward?President Trump recently fired McEntarfer for “faking” the jobs numbers for “political purposes,” as the July jobs report pointed to a very weak economy.Clearly that’s not good for the President, who wants the economy to convey resilience and strength under his leadership.The very bad jobs report instead showed that the economy is beginning to crack under the new administration, at a time when they also push global tariffs and risk even more harm.As such, President Trump replaced McEntarfer with E.J Antoni, who appears to be more aligned with the administration, even mentioning on X to fire the Fed and pause the monthly jobs report.Here’s the problem with that, assuming you want lower mortgage rates, which both President Trump and FHFA director Bill Pulte have stressed for a while now.Without bad news, or at least more of the same weak economic data, mortgage rates will have a tough time moving lower.Even if the new-look Fed becomes super accommodative again and lowers the federal funds rate multiple times, which is now expected, long-term mortgage rates may not follow.They still need cues from actual economic data to substantiate a move lower. Without it, they won’t budge. At least not by a sizable amount.If the jobs report is delayed, held back, or painted in a falsely-positive light, it won’t do mortgage rates any favors.A strong jobs report would send the opposite message, that the economy isn’t doing as bad as those last reports indicated.Or worse, is hot again, at which point any interest rate cuts would seem completely unwarranted.It all illustrates the conflict of interest taking place at the moment, with the administration wanting a more dovish interest rate policy to reduce the country’s interest expense.And to make housing affordability better for everyday Americans via lower mortgage rates.While also wanting to flaunt the strength of the economy under Trump. It doesn’t work that way.You can’t have both. You’ve got to pick one. Otherwise it risks another serious bout of inflation, something we’ve actively fought over the past few years post-ZIRP and QE.Bringing back low mortgage rates for a short-term win risks reigniting inflation again and making our current problems that much bigger.The Fed Rate Cuts Are Already Baked InWhile the Fed doesn’t directly set mortgage rates (only its fed funds rate), Fed rate cut expectations can impact mortgage rates.Thing is, they are telegraphed well ahead of time and never come as a big surprise. Therefore, the day of a cut or hike has no bearing on long-term mortgage rates.Knowing the Fed is sure to cut next month means we won’t see any additional benefit to mortgage rates as a result.This is why folks are always confused/surprised when the Fed cuts and rates go up on the day, or vice versa.The cut/hike is already known as what happens the day of might affect rates one way or another (they don’t exist in a vacuum).As it stands, the odds of a rate cut at the September 17th meeting are about 83%, per CME, meaning it’s highly likely.The only way a Fed rate decision could sway mortgage rates is if something super unexpected happens, like a sure-thing cut becomes a hold. But that seems like a long shot.And again, you need the economic data to support cuts, otherwise the bond market won’t follow suit anyway.Without reliable economic data, we risk going down a very dangerous path that could ironically be paved with even higher mortgage rates.Read on: Treasury Secretary Bessent Calls for Huge Rate Cuts. What Will Mortgage Rates Do?(photo: k) Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 19 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on X for hot takes.Latest posts by Colin Robertson (see all)

The Bank of Glen Burnie, a Maryland-based depository, has acquired VA Wholesale Mortgage, a Virginia Beach, Virginia-based originator, with an office in Jacksonville, Florida. Terms of the deal were not disclosed.A check of the NMLS Consumer Access page has Virginia Wholesale Mortgage, how the Bank of Glen Burnie's second quarter Securities and Exchange Commission filing refers to the entity as, as a prior legal name.Where VA Wholesale operatesWhile a press release lists VA Wholesale as a mortgage broker, the company has lender licenses in Maryland, Tennessee and Virginia.It has broker licenses in the District of Columbia, Florida, Georgia, North Carolina and Virginia, and a mortgage company license in Texas.Plans are for VA Wholesale to operate as a dedicated division of the Bank of Glen Burnie for the foreseeable future.VA Wholesale began lending in early 2020 and specializes in working with active-duty and retired members of the military through the Veterans Affairs and Federal Housing Administration programs. It also offers conventional, jumbo and non-qualified mortgage products.The Bank of Glen Burnie will provide capital to fund the mortgage company's growth, said Mark Hanna, president and CEO of both the bank and its parent company Glen Burnie Bancorp, in a press release.Integrating VA Wholesale into the Bank of Glen BurnieThe plans call for the bank to grow the mortgage team with originators in Anne Arundel County, where the bank is located with six branches, and expand as demand increases, Hanna said.VA Wholesale will allow the bank to grow its mortgage offerings in terms of both product and geographic reach, "much faster than we could organically," Hanna said.Besides FHA and VA, the mortgage company expertise in working with first-time home buyers and those that need to make a lower down payment."This accomplishes the goal of The Bank of Glen Burnie serving our growing customer base at a higher level, including the small business owners, their employees, and families who have chosen to bank with us," Hanna said.In 2024, VA Wholesale Mortgage closed approximately $125 million. It has 17 sponsored loan originators, according to the NMLS. The Bank of Glen Burnie has 15; its status as a federally insured depository means it does not need state licenses.VA Wholesale Mortgage CEO Eric Tan, a U.S. Navy veteran, will remain with the company under the new ownership."Having a committed funding source will broaden our reach, allowing us to grow and meet the needs of our customers more readily, while also increasing lending volume," Tan said.Milestone Mergers and Acquisitions, based in Fairfax, Virginia, assisted the Bank of Glen Burnie in this transaction.Recent acquisitions of smaller mortgage originatorsAmong recent M&A transactions in the mortgage business, Anniemac purchased two Florida-based companies in recent weeks. It started with Florida Funding, a $600 million volume originator headquartered in Orlando during July. Last week Anniemac bought Home Solution Lenders of Bartow, a $200 million shop.Another deal from last week involving a depository brought together Great Lakes Credit Union with Fit Mortgage, based in Birmingham, Alabama and licensed in five southern states.

Mortgage applications for new-home purchases accelerated in July, as borrowers took advantage of homebuilder concessions and a drop in interest rates, according to new industry data.New single-family residential mortgage applications rose 6.8% year over year last month, according to the Mortgage Bankers Association. The increase coincided with greater overall mortgage activity in the back half of July, as borrowers took advantage of declining rates and a surplus of inventory.  "Purchase activity for new homes strengthened in July as both mortgage applications and estimated new home sales reached their highest levels since April 2025," said Joel Kan, MBA vice president and deputy chief economist, in a press release.While applications kept heading higher, the pace slowed from June's 8.5% jump. Month to month, new-home mortgage applications increased 7%, according to MBA's non-seasonally adjusted data. The combination of downwardly trending interest rates and increasing inventory levels lifted the fortunes of builders' lending affiliates and "likely helped to improve affordability," according to the MBA. "Many builders are still offering concessions to buyers," Kan continued. While a boost to the lending community, the pivot toward buyer concessions doesn't necessarily represent the same positive news to the bottom line for homebuilders, who are still facing adverse impacts of a sluggish housing market currently compounded by tariff worries. Over one-third of companies offered price cuts earlier this summer leading to greater construction industry pessimism, the National Association of Home Builders previously reported. Anticipated new-home sales surge, while lending amounts shrinkHome price concessions contributed to lower average July loan sizes, which came in at $372,745, the MBA reported. The mean amount maintained its decreasing summertime trend, shrinking 0.9% from June's $376,077. The latest number also represents an annual 5.2% fall from $393,344 in July 2024.  July activity, though, led to an updated seasonally adjusted annual rate for new single-family home sales of 685,000. The estimate climbed higher by 2.7% from June's 667,000 units.Last month saw approximately 58,000 sales of new single-family homes, with the total increasing 5.5% from June's 55,000. Conventional lending products accounted for almost exactly half of all the loans in July, taken out by 50.1% of applicants, up from 50% in June but narrowing from the 60.1% portion one year ago. The share of new-home loans backed by the Federal Housing Administration made up 35.3%. As existing-sales inventory diminished and became less affordable this decade, the FHA share of new-construction borrowing surged in response over the past several months, providing glimmers of opportunity for lenders. The lower-balance loans are frequently used by first-time buyers. July's FHA portion increased from 35.1% a month earlier and 29.1% from July 2024, which, at the time, was the largest share in over 10 years.Meanwhile, new-home applications backed by other government lending programs similarly saw borrower activity grow from last year. Applications backed by the Department of Veterans Affairs represented 13.4% of total volume, dropping from 13.8% in June. A year ago, VA loans accounted for only a 10.4% share.  U.S. Department of Agriculture-sponsored mortgages made up 1.2%, relative to the number of July applications. While the share remained the same as what was reported in June, it surged from 0.4% a year ago. 

Bond traders' big bet that the Federal Reserve is poised to lower interest rates faces a key moment this week as Chair Jerome Powell gets a chance to weigh in on the economy.Powell's speech on Friday at the central bank's annual gathering in Jackson Hole, Wyoming, kicks off a make-or-break stretch for the Treasury market, which sees a quarter-point rate cut next month as virtually a lock, with at least one more by year-end. He's used the occasion to make market-moving policy pronouncements in recent years, and this time the setting is potentially momentous.READ MORE: Mortgage rates move lower on inflation, employment newsTraders are confident that a weakening job market has opened the door to a more dovish tone from the Fed chair, although surprisingly hot inflation data gave some economists pause. For now, investors expect that he'll refrain from upending their wager on a cut next month, while likely offering a reminder that officials' Sept. 17 policy decision will hinge on reports before that gathering to confirm that the labor market is cooling and that inflation is in check."He has the capacity to do something that's market-moving, but I'm not necessarily sure that he's going to," said Kelsey Berro, executive director for fixed income at JPMorgan Asset Management. Bond-market pricing is "still consistent with kind of a sub-trend, soft-landing environment. I don't think that they see a big reason to push back against the market expectations."READ MORE: Homebuilders encounter credit, supply cost headwindsYields are lower across most maturities in August, led by the two-year, after weak July employment figures boosted bets on Fed easing. The result is that the yield curve has steepened this month, with the two-year rate settling around 3.75%, not far above its lowest levels of the past few months. Treasuries gained Monday, with benchmark 10-year yields slipping three basis points to 4.29%. Wyoming SurpriseThat backdrop is adding to the focus on the Jackson Hole confab. Three years ago, Powell pushed short-dated yields higher with a warning that fighting inflation would bring pain to households and businesses.  At the symposium last year, he signaled that the Fed was ready to lower borrowing costs from a two-decade high. Two-year yields tumbled that day as the comments vindicated traders who'd been wagering on rate cuts. That September, the Fed delivered the first of a series of reductions, with a jumbo half-point move. Some traders are bracing for a repeat of that decision. A series of large option trades have targeted a half-point move next month, even after the jump in producer prices. Those bets would become profitable if the market priced about 40 basis points of easing into the September meeting.The intensifying clamor from President Donald Trump and others in the administration to reduce borrowing costs is helping fuel those bets. Powell has signaled for months that he needed time to see the impact of tariffs on inflation, and he's stuck to that stance in the face of Trump's efforts to strong-arm him into cutting."The Fed's under a tremendous amount of pressure," said Scott DiMaggio, head of fixed income at AllianceBernstein. "They're a little bit behind, but they've been waiting to see the impact of tariffs and what it's doing to the economy and to inflation." The data has gotten to the point, according to DiMaggio, "where you can say, 'Yes, they should resume that rate-reduction cycle.'"Decisive DataFollowing Jackson Hole, the market will focus on August jobs data to be released Sept. 5 and whether it seals the path for easing next month and potentially flags the possibility of even a shock half-point cut. To be sure, several investors and traders said a move of that size is unlikely following the hot producer inflation report."Our sense is that it will come down to the jobs report," said Gregory Faranello, head of US rates trading and strategy for AmeriVet Securities. "If it's weak we'll price for 25 and don't believe Powell will fight it."A faster pace of easing could well bolster the economy at a time when inflation remains stubbornly above the Fed's target, and with a potential fiscal tailwind ahead from Trump's tax-and-spending bill. Together with investor concerns about the administration's pressure on the central bank and the president's move to replace the leader of the Bureau of Labor Statistics, that could push money managers to demand a higher risk premium on longer maturities."Front-loading aggressive cuts requires the Fed to set aside any remaining upside inflation risks" and take the view that unemployment is biased sharply higher, said Ed Al-Hussainy, a rates strategist at Columbia Threadneedle Investment.

You may have heard that Warren Buffett’s Berkshire Hathaway bought shares in a pair of home builders last quarter.The company released its latest 13-F yesterday, revealing the buys during the second quarter.This has led to a lot of speculation about why they’d be buying stock in home builders, which have struggled of late due to a lack of affordability.Is something expected to change sometime soon? And if so, what exactly would make these companies all of a sudden attractive?Perhaps the thought of lower mortgage rates is behind theWhat Does Berkshire See in the Home Builders?During the second quarter, Berkshire Hathaway purchased a whopping 5.3 million shares of Lennar (NYSE:LEN).A quarter earlier, the company loaded up on 1.8 million shares to add to the 200,000 shares it bought back in 2023, bringing their total above seven million shares.It was also revealed that Berkshire acquired 1.5 million shares of D.R. Horton (NYSE:DHI) in the first quarter before selling 27,000 of those shares a quarter later.Berkshire had previously owned DHI stock, acquiring six million shares in Q2 2023 and unloading them by the fourth quarter of that year.Now they appear to be back on the builders, but why? Why at a time when the housing market seems shaky, and affordability remains poor?Oh, and new home inventory keeps ticking higher and is now approaching 10 months of supply.Outside of the spike in the second half of 2022, when mortgage rates surged from sub-3% levels to 7%, newly-built inventory hasn’t been higher since the Great Financial Crisis (GFC).It’s possible they just saw a bargain, with Lennar shares trading as high as $178 last September before falling to nearly $100 in April.Similarly, D.R. Horton shares nearly touched $200 late last year and then tumbled to around $125 per share in the first quarter.So it’s perfectly feasible that they just saw a big drop in share price and felt it was a value play, perhaps around Liberation Day.But you still need to have a belief that they’ll perform well in the near future.And in order to that, they’ll need to keep selling homes for a profit, despite poor buying conditions today.How Lower Mortgage Rates Could Reignite the Housing Market and Help the Big BuildersD.R. Horton and Lennar are the two largest home builders in the country, which has its advantages.One of them is being able to offer mortgages via their own in-house lending units, DHI Mortgage and Lennar Mortgage.When you look at housing affordability, it eroded quickly due to the unprecedented shift in mortgage rates, as seen in the chart above from ICE.This is mainly why home builders now offer massive mortgage rate buydowns, to keep affordability in range, even without lowering prices.However, that also costs them a lot of money, and if they can get more buyers in the door without that cost, their margins would improve once again.Lower mortgage rates could turn things around in a hurry. For example, a 1% decline in mortgage rate is akin to an 11% price drop.So if mortgage rates were able to come down some, the builders would have an easier time unloading inventory.A lot of people seem convinced all of a sudden that mortgage rates are coming down, largely because they think the Fed is going to become more accommodative once Chair Jerome Powell exits in May.While that’s not necessarily how it works (the Fed doesn’t set mortgage rates), they can lower the fed funds rate.That would lead to lower rates on HELOCs without question (since prime and the FFR move in lockstep), and could arguably lead to lower rates on adjustable-rate mortgages (ARMs) as well.At the same time, a cooling economy could bring long-term mortgage rates like the 30-year fixed down too if the data continues to support that narrative.The latest jobs report was what pushed mortgage rates back toward the lower-6% range, and if it continues into coming months, rates will likely drift even lower.Of course, you’ve got the trade-off of a weaker economy, which means home buyer demand could take a hit too.But lower rates could certainly provide a tailwind for the home builders and allow them to clear their inventory much easier.Perhaps Berkshire is banking on another leg up for the housing market on this theory. Or, as alluded to earlier, they just saw a value play, and could be holding for only a short period. Time will well.Read on: Home Builders Are Advertising Monthly Payments Instead of Home Prices to Clear Inventory Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 19 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on X for hot takes.Latest posts by Colin Robertson (see all)