8.14.26 Wages Versus Inflation; UpPayment recipient Tiffany Bauldwin on Home Ownership; Treasury Demand

Robbie ChrismanWelcome to the Chrisman Commentary, Daily Mortgage News Podcast. I'm your host, Robbie Chrisman. Topics on today's episode include wage growth versus price growth, assumptions of the Federal Reserve's next move, and my interview with uppayment recipient Tiffany Baldwin on her first-time homebuyer journey, including how homeownership has shaped her confidence, future, and long-term finance outlook. Here, take a listen, do a little preview.Robbie ChrismanYou were selected for the uppayment program, which for people that might not be intimately familiar, Progressive Insurance just expanded their uppayment program, which is a down payment assistance program that will provide up to $13,500 in support to at least 200 applicants this year to help offset upfront costs associated with purchasing a first home. Progressive is committing $3.5 million in 2026 toward down payment assistance for eligible first-time home buyers. And that that's great news because down payment to me is the hardest part of getting into a home. So when you learned that you were selected for this program, Tiffany, what went through your mind and how did that change not just your finances, but your your confidence overall as a home buyer?Tiffany BaldwinI was shocked and amazed. It's done so much for my confidence. Yeah, it's stressful and it's like an uphill battle trying to buy a home, but I felt supported. That meant everything. Even now, we live here, we've been here almost a year. I still have that confidence. Like I have the confidence that motivates me to want to still do better and still strive towards different dreams now because of the program. All hope wasn't lost. And it almost was, which is amazing. It's not just confidence for like it's not just like confidence for me is for my baby. Being able to show Sophie that there are resources out there, even if you feel like you can't do it alone, you can co-create your dreams, and anything is possible as a gift. Being able to show my daughter that your dreams are possible.Robbie ChrismanSimple, but maybe complicated in a lot of ways.Tiffany BaldwinHome own ownership to me means stability and protection. I didn't grow up in a stable environment and we were always moving from place to place. Always had a hope that it could be different. To me, it means everything. Um, had the freedom just in the simple appreciation of things like gardening or sitting out on the porch or seeing the sunrise and not having to worry. And just not having to worry.Robbie ChrismanThanks to this week's podcast sponsor, Optimal Blue. Did you know Optimal Blue's profitability center unifies pricing, hedge performance, pipeline activity, profitability, and market intelligence into one personalized dashboard, giving mortgage lenders faster, more complete insights to make better capital markets decisions. To learn more, visit OptimalBlue.com.Robbie ChrismanOwning a home is all about having a job and spending less than you earn. Bank rates 2025 wage to inflation index revealed that prices rose 23% since the start of 2021, while wages were up a cumulative 22%. This is why many households feel like they're falling behind, even if they're making more money, not even looking at the current prices for gas or steak. For lenders interested in vendor management, return on equity is important, and part of that is making sure third-party providers talk to each other. Hearing about that is covered in the monthly Crispin demo days that kicks off August 20th, built for people who want to see how new technology actually works, not just hear about it. I was at the Western Secondary Conference down in LA earlier this week, and one notable theme was the rise of non-agency production. LOs know that DSCR loans aren't really a residential product, but there's plenty of other products. Today's non-QM market bears little resemblance to the pre-crisis non-agency market when lending was largely a credit risk outlet for borrowers with damaged profiles. Instead, modern non-QM is primarily a situational lending solution for financially sound borrowers whose income or assets do not fit neatly into agency guidelines, including self-employed borrowers, investors, and people with complex tax returns. The performance is there. Despite early skepticism that non-QM was simply subprime 2.0, disciplined underwriting, risk retention requirements, and lender's own capital at risk have produced a strong performance record, while the expanding production of contractors and self-employed workers has structurally increased the addressable market. Additionally, automation has removed much of the historical friction, particularly the tedious process of calculating income from bank statements, making non-QM increasingly accessible to mainstream originators, rather than a specialty product requiring extraordinary underwriting expertise. The opportunity is also expanding beyond traditional non-QM mortgages, particularly through bank statement HELOCs and closed-end seconds, which allow homeowners with valuable equity and low-rate first liens to access cash without refinancing away an attractive mortgage rate. With projected annual non-QM originations around $150 to $200 billion this year, and securitizations around $80 to $85 billion, the sector is growing even without a broader mortgage market boom. Helped by originators using non-QM as a way to reconnect with referral partners, and borrowers who previously assumed financing was unavailable. Meanwhile, tighter credit spreads reflect investor confidence in the asset class and its performance. With consumer pricing now driven less by non-QM credit risk, if rates decline meaningfully, the combination, proven performance, expanding borrower demographics, better technology, and substantial homeowner equity should only increase non-QM as a mainstream component of residential lending. In that vein, mortgage credit availability increased in July per the mortgage credit availability index report from the Mortgage Bankers Association. It now sits at the highest level since July of 2022 as greater availability and expanded guidelines for ARM and streamline refinance loans, including some with lower documentation requirements, drove most of the increase. Jumbo credit availability has grown in almost every month this year, and this month's increase brought the Jumbo index to its highest level since 2020. Additionally, non-QM loan programs continue to account for a substantial share of this growth. Underwriting standards, credit quality, and borrower performance are all related. Ginnie Mae mortgage delinquencies have risen to levels that warrant close monitoring, but do not yet signal a systemic crisis, with 90 plus day delinquencies in Ginnie Mae 2 30-year pools reaching roughly 3.9%, the highest in more than a decade outside the pandemic period, driven primarily by FHA borrowers. Notably, FHA severe delinquencies at 5.3% are more than four times their pre-COVID average, while VA delinquencies at 1.8% are more than double their historical norm. The broader delinquency picture is even more stark, with early-stage delinquencies at 11.4% for FHA and 3.8% for VA versus just 1.3% for conventional mortgages. Recent roll rates have actually moderated relative to long-run averages, suggesting that deterioration is concerning rather than yet alarming. Rising delinquencies in the lower credit, low-down payment FHA segment reinforce the importance of maintaining disciplined credit standards and closely monitoring the relationship between borrower credit quality and future mortgage performance. Looking at economic data, with PPI unchanged month over month in July when it was expected to increase 0.1%, and core PPI increasing less than expected, total PPI and core PPI both declined on a year-over-year basis versus June, it would appear there are no new inflation surprises. Paired with a CPI report that showed some welcome disinflation on a year-over-year basis, and a sharply weakening labor market, with payrolls falling 23,000 in July, prior months being revised down by 103,000, wage growth slowing to 3.15% year over year, the participation rate dropping to 61.4%, and annual payroll growth slowing to just 0.2%. It certainly makes a rate hike from the Federal Reserve increasingly difficult to justify. For today's interview, I wanted to welcome to the show uppayment recipient, Tiffany Baldwin, on her first-time homebuyer's journey, including how achieving homeownership has shaped her confidence, future, and long-term financial outlook. The 2026 uppayment program from Progressive will provide homeowners with down payment assistance of up to $13,500 each toward the purchase of a first home. At least 200 eligible first-time home buyers will be helped this year to overcome financial barriers through down payment assistance via the program.Robbie ChrismanTiffany, I'm very excited to have you on the show today because it's nice to hear from the borrower perspective. Normally, this podcast, we talk with people that are working in the mortgage industry, but I always like hearing from homeowners or prospective homeowners because that is kind of the base of the American dream. And we can get into your story here. I remember buying my first home and sitting there at the closing table going, This is a lot of paperwork I have to sign. But every homeowner has a moment when homeownership starts to feel real. Maybe it was real there for me, or maybe it was real when I realized I needed to replace thousands of dollars of water pipes right after closing that we didn't know about before. Anyways, can you tell listeners about your journey and the moment you realize this might actually be possible for me?Tiffany BaldwinWell, a little bit about us. We came up from Georgia about six years ago, and that was the dream. I wanted to find a house and live in a beautiful, peaceful place. Last July, we found this house. And like you were saying, like uh, there's all these steps you have to take just crunching my numbers and being realistic about not having enough to close. I did research online. And with my research online, I found this program that Progressive has for first-time home buyers of payment. I told him, I told my story. I told him about how I was a little girl, I always wanted a place. I told him about being homeless throughout my childhood and some of the struggles. We were getting close to closing. But it honestly didn't become real until I received the email that said that we said that we were accepted. It said we're accepted. And so for me, that's when it really became real. Like uh came to closing, knowing that I would actually have the money to close. I can hear just just how much it's just the amount of relief and joy of knowing that we were gonna get what me and my daughter Sophia call it is our forever home. And it's a place that we could forever come to and be ourselves and be free. And that's where most of my emotions come from. I get I cry like mostly like tears of appreciation now. And so that was the magical moment.Robbie ChrismanYeah, I I remember the first the when I was going through the home buying process for the first time, just feeling so overwhelmed. Do I lock now? Do I lock later? Do I put down points? Do are these the right documents? Should I am I in the right? All these, all these different things that that are just so overwhelmed. And I work in the industry and I was still like, holy smokes, this is overwhelming for me. And that's to say nothing of saving for a down payment, which is a big reason why we're here today. You talk about the biggest challenges you faced and maybe take us inside your psyche. How did you stay motivated when the process felt uncertain, which it can at various points throughout the origination?Tiffany BaldwinYes, uh, because our home, which is a year older now, which makes it 126 years old. Wow, it it took some talking and some actually coming out and figuring out how to get the boiler to work to show that it was fit. And like you were saying with the plumbing, I had to fix some water damage that happened and get the plumbing online. And like the whole time I'm thinking, like just trying to keep hope alive and saying that this is our home and it's gonna happen, it's gonna happen. But I had to like go and research different things that we had to fix. Um, because I just it's not in my wheelhouse. Actually preparing my little, my wee one who had become really attached to where we were before she had made so many friends and stuff, and explaining to her what it really means, like not just for us two, but like our family, and just explaining that it's not it's not just mommy's dream. These are long, long time dreams that my parents had, like my grandparents had, even my great-grandma. I feel like like buying your first house is magic. So we didn't just do this magic for us, we did it, we did it for our whole family.Robbie ChrismanIn addition to fulfilling the dreams of previous generations, I think it's going to assist in the dreams of future generations. You know, your great great-grandchildren will benefit from this, which is pretty cool. Has it changed the way you think about your future, her future, building long-term financial security?Tiffany BaldwinYeah, I've been working towards different certifications so I could move forward in my career. Sophie, I think it was this year, she just started talking about different colleges and stuff that she wants to go to. She's 11. I when I when you say that, the first thing I think about financially is that we're able to actually grow our own vegetables now, which is also like, I don't know, it's really important um to be sustainable. We have like the the land to do it. And as far as savings goes, she started saving money for school and money for like her goals, and it is kind of incredible. She does budgets, which is funny for 11-year-old. I'm digressing.Robbie ChrismanNo, that's that's that's that's great. She's she's way ahead of the curve. Financial literacy isn't taught in schools, it isn't taught by parents most of the time. And so for her to already be on that track, I mean that that's going to pay off and work wonders later in life. So, congratulations to her, congratulations to you. I do have one more question here. More than a question, it's it's I guess I'm asking you to give a little motivational speech here. What would you say to someone who's feeling discouraged but still dreams of owning a home one day? Because there's a lot of people out there that believe homeownership's out of reach. And I'm I'm sure for a period there you felt that way.Tiffany BaldwinI would say the same thing. I do, I tell, I've told all my family that it's possible. Find your home that you want. Even to my family, I was like, just go fill out the application with progressive, speak from your heart, and then just believe. It's the belief along with searching for resources. I hope for a really long time that I can own a place on my own, be free to be myself and free to start new traditions of love for Sophie. And it could be discouraging. I would tell those people never to give up because it's worth it. The peace and the joy and the appreciation of being able to provide for Sophie and my two Akitas and my cat and to fulfill a dream for little Tiffany. So anybody that I meet, I usually say that has a program. It's not a payment program, you go on there, you go on an application, you tell them about your story, and then you just believe it's gonna happen for you. I don't know.Robbie ChrismanTiffany, this is fantastic. I I want to congratulate you from the bottom of my heart on being a homeowner. How much it means to you, and and I I think that will be apparent to listeners as well because there's just there's so much emotion involved with it. So congratulations on homeownership. Thank you very much for making the time to speak with me. And uh yeah, wish you best of luck.Tiffany BaldwinThank you.Robbie ChrismanAgency mortgage-backed securities and U.S. Treasuries took some solace in the assumption that the Fed is less likely to raise interest rates next month. However, inflation remains well above the Fed's 2% target and therefore still leaves room for caution among inflation hawks. July's softer inflation data reduced expectations for the implied probability of a 25 basis point increase next month, falling from over 40% to under 35%, prompting a favorable response in the front end of the Treasury curve. But that's the front end of the yield curve. The US government yesterday sold 30-year bonds at the highest interest rate in a quarter of a century, a testament to investor demand for compensation to finance the nation's expanding deficit. The yield at the $25 billion sale Thursday came in at 5.22%, the highest since 2001. The sale follows the Treasury Department's 10-year auction on Wednesday that drew the highest financing cost at that duration since 2007. Today's economic calendar kicked off with July retail sales, which were down 0.6%, a downward surprise versus a prior reading and expectations of a 0.2% increase. Retail sales, excluding auto, were down 0.3%. Retail sales were forecast whoever is in modestly in July. Remember, these aren't inflation adjusted, held back by lower spending at gas stations and new vehicle sales. Core sales were also supposed to print stronger. Later today brings June business inventories and preliminary August University of Michigan consumer sentiment. We begin the day with agency MBS prices slightly better than Thursday's close, given the week retail sales numbers, the two-year yielding 4.10, and the ten-year yielding 4.63 after closing yesterday at 4.64%. Let's wrap up with a joke and some housekeeping. A guy stuck his head into a barber shop and asked, How long before I can get a haircut? The barber looked around the shop full of customers and said, About two hours. So the guy left, and a few days later, the same guy stuck his head in the door and asked, How long before I can get a haircut? The barber looked around the shop and said, about three hours. The guy left. A few days later, the same guy stuck his head in the shop and asked, How long before I can get a haircut? The barber looked around the shop and said, About an hour and a half. The guy left. The barber turned to his friend and said, Hey Bob, do me a favor, follow him and see where he goes. Keeps asking me how long he has to wait for a haircut, but he never comes back. A little while later, Bob returned to the shop, laughing hysterically. Barber asked, So where does he go when he leaves? Bob looked up and replied, Your house.Robbie ChrismanThanks again to Optimal Blue for sponsoring this week's podcasts. Optimal Blue's Profitability Center unifies pricing, hedge performance, pipeline activity, profitability, and market intelligence into one personalized dashboard, giving mortgage lenders faster, more complete insights to make better capital markets decisions. To learn more, visit OptimalBlue.com.