12.5.25 Federal Reserve Purview; Creative Title's Caleb Christopher on Responsible Lending; Consumption Expenditures

Welcome to The Chrisman Commentary, your go-to daily mortgage news podcast, where industry insights meet expert analysis. Hosted by Robbie Chrisman, this podcast delivers the latest updates on mortgage rates, capital markets, and the forces shaping the housing finance landscape. Whether you're a seasoned professional or just looking to stay informed, you'll get clear, concise breakdowns of market trends and economic shifts that impact the mortgage world.

In today’s episode, we discuss just what the Federal Reserve can control as the prices of rare earth metals skyrocket. Plus, Robbie sits down with Creative Title’s Caleb Christopher for a discussion on how lenders can adopt advanced AI and creative financing models while maintaining transparency, security, and consumer protection, and examining how private-capital “non-bank bank” structures, tightening credit, and the needs of underserved borrowers will shape the balance between innovation, risk, and trust. And we close by examining what delayed releases are telling us about the state of inflation.

Today's podcast is presented by Two Dots. Whether it’s applying to rent an apartment or take out a loan, today’s approval process is full of blind spots and inefficiencies. Critical data sits locked inside documents, leaving companies with an incomplete picture that causes delays, increased risk, and inconsistent decisions. Two Dots is building a better system. One where underwriting and screening is automated not manual. Where applications happen in real-time within a dynamic and contextual conversation. And where better decisions are made faster for everyone.

Transcript

Recently I paid over $10 for a simple Oscar Mayer 12-ounce package of bacon. Jerome Powell, help me! Well, the U.S. Federal Reserve doesn’t set bacon prices, or things that come from China like rare earth metals, most of which I’ve never heard of but are apparently in my phone and car’s dashboard. Geopolitical tensions and export restrictions in China sending the prices of crucial metal components in electronics way up. The price of dysprosium is up to $910 per kilogram, triple the pre-export restrictions price. The price of terbium hit $3,700 per kilogram, quadruple the previous rate. The benchmark price for gallium has reached $1,325 per kilogram, which is 2.3 times the price at the beginning of the year and the highest price on record. China produces 99 percent of the world’s gallium. Our Federal Reserve can only do so much when it comes to combatting inflation. (Today’s podcast can be found here and this week’s are sponsored by Two Dots, whose conversational screening agent replaces manual underwriting with a streamlined, end-to-end process that reduces risk and fraud while securing safer borrowers, increasing profitable loan volume, and lowering underwriting overhead. Today’s has an interview with Creative Title’s Caleb Christopher on how lenders can adopt advanced AI and creative financing models while maintaining transparency, security, and consumer protection, and examining how private-capital “non-bank bank” structures, tightening credit, and the needs of underserved borrowers will shape the balance between innovation, risk, and trust.)

FHA published updates to its Single Family Housing Policy Handbook 4000.1 (Handbook 4000.1). This update includes the incorporation of previously published Mortgagee Letters (MLs) and various technical edits, including hyperlink updates. See the Handbook 4000.1 Transmittal for a summary of revisions, changes, effective dates, and other pertinent information. For comparison purposes, a separate redlined version has also been posted on the Handbook 4000.1 Information webpage.

AmeriHome Mortgage Product Announcement 20251102-CL provides information regarding USDA’s recent publication of PN 649 providing notice of handbook updates along with other policy guide changes.

Capital markets: Ginnie issuance continues higher

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If you’re wondering where the mortgage market is headed in 2026, this webinar is a must-watch. Yesterday’s Agile Trader Talk webinar explored the 2025–2026 market outlook at a pivotal time, as shifting monetary policy, liquidity conditions, technological advances, and geopolitical developments continue to reshape the financial landscape. Hosted by Agile President Greg Vacura, the conversation featured leading broker-dealer panelists who break down major market trends, deal flow expectations, regulatory and compliance considerations, and the opportunities and risks on the horizon for 2026. The discussion offered timely insights into market structure, trading dynamics, and the forces most likely to influence the road ahead. View the recording to learn more, then join Agile’s newsletter to be notified of upcoming releases.

Mortgage rates are heavily influenced by the MBS market, which in turn is influenced by supply and demand. Investors are increasingly turning to U.S. mortgage-backed securities as a refuge from high valuations in corporate bonds and a surge in tech bond issuance to fund artificial intelligence infrastructure. JPMorgan Chase projects investment-grade issuance to exceed $800 billion in 2026, with significant contributions from tech firms. Mortgage bonds, on the other hand, are set for their best returns in two decades, driven by stable supply and strong demand from real estate investment trusts and potentially banks.

Ginnie Mae knows a thing or two about MBS, and its combined September and October 2025 update shows the mortgage-backed securities (MBS) portfolio outstanding increased from $2.83 trillion to $2.84 trillion. Monthly issuance reached $46.8 billion in September and $50.2 billion in October totaling $97 billion, contributing to $23.1 billion in net portfolio growth. Ginnie Mae supported the pooling and securitization of loans for more than 286,000 American households, including over 126,000 first-time homebuyers, helping strengthen liquidity and stability throughout the U.S. housing finance system. Key highlights from the September issuance include $44.4 billion in Ginnie Mae II MBS, $2.4 billion in Ginnie Mae I MBS, including $2.3 billion for multifamily housing loans, and the pooling and securitization of loans for more than 138,000 households, including over 65,000 first-time homebuyers. Key highlights from the October issuance include $48.3 billion in Ginnie Mae II MBS, $1.8 billion in Ginnie Mae I MBS, including $1.8 billion for multifamily housing loans, and the pooling and securitization of loans for more than 148,000 households, including over 61,000 first-time homebuyers. For all the stats, visit Ginnie Mae Disclosure.

All this talk about how the Federal Reserve should be cutting rates, meanwhile expectations for a December rate hike from the Bank of Japan lifted the 10-yr JGB yield to a level not seen since 2007 yesterday and there are also expectations for an eventual rate hike from the Reserve Bank of Australia after the release of strong household spending data. Markets are increasingly focused on the labor market as the dominant driver of FOMC policy expectations, with tariff-linked inflation fears fading and global rate pressures failing to meaningfully influence U.S. yields. The next meaningful shift in yields is more likely to come from the Fed’s tone, guidance, and updated projections at the conclusion of its meeting next week rather than from incoming macro releases.

The U.S. rates market remains firmly range-bound, with 2-year yields near 3.50 percent and 10-year yields holding between roughly 4.00 percent and 4.15 percent. Weak ADP data from earlier this week cemented expectations for a 25-basis points Fed cut this upcoming Wednesday and a more balanced policy tone, while inflation continues to moderate. However, labor market signals are becoming increasingly hard to decipher, between the aforementioned weak ADP figures, delayed BLS data, and initial jobless claims hitting a two-year low this week. Concerns about a potentially more dovish Hassett-led Fed and related reflation worries are simmering, but the broader backdrop leaves investors comfortable with range-bound trading. Any sharp sell-off in bonds is likely to attract buyers, especially if 10-year yields approach 4.15 percent.

Mortgage rates fell for the second straight week in Freddie Mac’s Primary Mortgage Market Survey: for the week ending December 4, the 30- and 15-year mortgage rates fell 4-basis points and 7-basis points to 6.19 percent and 5.44 percent, respectively, and are within 3-basis points of the YTD lows from October. From a year ago, rates are 50-basis points and 52-basis points lower.

Today’s economic calendar has, at some point, the much-delayed PCE (Personal Consumption Expenditure) report for September along with preliminary December Michigan sentiment. Expectations are for personal income and spending increasing 0.4 percent and 0.3 percent month-over-month, versus 0.4 percent and 0.6 percent previously, with the core PCE Price Index increasing 0.2 percent month-over-month and 2.8 percent year-over-year versus 0.2 percent and 2.9 percent in August. Consumer credit for October rounds out this week’s calendar in the afternoon. We begin the day with Agency MBS prices unchanged from Thursday’s close, the 2-year yielding 3.53, and the 10-year yielding 4.11 after closing yesterday at 4.11 percent.

Going to church doesn't make you a Christian any more than standing in a garage makes you a car.

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(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes, visit the Chrisman Job Board. This newsletter is intended for sophisticated mortgage professionals only. There are no paid endorsements by me. For the latest mortgage news, visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.ChrismanCommentary.com. Copyright 2025 Chrisman LLC. All rights reserved. Paid job & product listings do appear. This report or any portion hereof may not be reprinted, sold, or redistributed without the written consent of Rob Chrisman. The views and opinions in this newsletter are mine alone unless otherwise specifically stated herein.)