We’ve spent the past several days reiterating and lamenting the onset of the holiday trading doldrums–a time of year that sees vastly lower volumes/liquidity/participation, and thus runs the risk of volatility that’s more random and larger than it otherwise would be. Now this morning, GDP came in much higher than expected and bonds are selling off somewhat sharply. Rather than fly in the face of the holiday trading environment realities, this is actually a prime example. The best evidence for this is the discrepancy between the size of the movement in bonds and the associated volume. Simply put, the movement in bonds is much larger than the reactions to NFP (jobs report) or CPI, but the volume isn’t even close to half the size.

It is natural to be skeptical of our dismissive tone this morning.  After all, GDP sounds like a big, important report, and a sharp sell-off seems logical given the 4.3% vs 3.3% result.  But the underlying details suggest it was simply “fairly strong” as opposed to a true barn burner (thinking of things like “real final sales to domestic purchasers” at 2.9%, and the 4 quarter avg GDP moving up only modestly in the mid-2% range, and a negative reading in cyclical GDP components). 
Bottom line: if these numbers were coming out during a more actively traded time of year, they may not be having as much of an impact.  But as it stands during the holiday doldrums, 10yr yields are pushing the ceiling of the 4 month range and MBS are down almost a quarter point.

Will rates impact the latest MBA origination forecast of $2.2 trillion next year? Sure, although… The Federal Reserve has cut overnight rates, but longer-term rates (like 15- and 30-year mortgages) have done little or have gone up. Recently news came out that Freddie and Fannie are buying securities that they produce. If GM is buying its own cars, should its stock price go up, or does the price of its cars go up? Do GSE MBS purchases really move rates? The recent news that the GSEs have been purchasing mortgage-backed securities raised predictable questions about affordability and rate relief. Conceptually, it sounds supportive. In practice, I am skeptical about the impact, and my son Robbie observed that there is an important distinction between the Federal Reserve purchasing assets and the manufacturers of mortgage credit purchasing their own output. “Market driven mortgage rates respond to investor demand, spreads, and broader macro forces. They do not meaningfully move because someone decides they should. Rates have remained largely unchanged despite these actions. That alone suggests the market is signaling skepticism. Good intentions do not automatically translate into lower borrowing costs.” (Today’s podcast can be found here and this week’s are sponsored by Gallus Insight, which is transforming employee analytics into actionable insights. Gallus’ ROI tool for learning and development activity is the most powerful in the world, and also the easiest to use. Hear an interview with Amergy Bank’s Bill Dawley on how top originators are winning business in today’s environment and where affordability initiatives and fair lending intersect.)

Mortgage rates have broadly been in a narrow holding pattern for the past 4 months and an even narrower range during December. Today will do nothing to change that with the average lender ending the day exactly where they left of yesterday. Earlier today, however, the average lender was offering slightly higher higher rates. The upward pressure came courtesy of the bond market’s reaction to stronger GDP numbers for Q3. But that initial reaction proved to be a temporary overreaction, exacerbated by lighter trading participation associated with the holiday week.  In general, lower participation greases the skids for volatility, essentially magnifying the impact of events that might not have much of an impact otherwise. The bond market is technically open tomorrow (and thus, lenders will publish mortgage rates), but it should be even more heavily affected by holiday trading vibes.  Also, there isn’t much in terms of important econ data to cause the kind of volatility seen today–no to mention the fact that today’s volatility ultimately proved to be non-existent.

The inventory slowdown came as properties sold for 1.6% below asking prices, with some sellers opting to remove their listings altogether, according to Redfin.

The judge’s order allows potentially thousands of consumers to join the lawsuit against the company, similar to other fights between borrowers and servicers.

Principal will be distributed pro rata among the senior A1 through A3 certificates, and subordinate bonds will not receive any principal until all senior classes are reduced to zero.

Our experts expect a mortgage market reset in 2026 with an uptick in originations, but warn lenders not to skimp on compliance even as the reins loosen.

Range-Bound Cruise Control, PM Edition

Bonds came into the domestic session at slightly weaker levels and held mostly sideways for the entire day. There were no meaningful market movers in play, let alone any meaningful movement. Volume clocked in at the lowest non-holiday level of the year. NOTE: this week’s analysis will be shorter and more basic than normal unless something interesting happens.

Market Movement Recap

09:25 AM modestly weaker overnight and holding sideways so far.  MBS down 2 ticks (.06) and 10yr up 2bps at 4.16

01:52 PM MBS still down 2 ticks (.06) and 10yr up 2.8bps at 4.168

03:37 PM MBS down 1 tick (.03) and 10yr up 2.6bps at 4.166

As we approach the end of the year, we’re seeing the usual interest in other opportunities, especially if pipelines aren’t full or management is dealing with people “aging out.” I received this note: “Rob, I need a very targeted approach to finding a new CFO, as my current one is retiring. Know anyone who can help?” I do indeed. You can start with Paul Conway. The industry has seen its fair share of mergers and acquisitions, none of which is expected to cease in 2026. Of course, a big item is keeping the LOs or AEs together after a merger or acquisition, on top of watching for cultural fit. Companies need to determine their strategy… don’t let the market dictate it. (Today’s podcast can be found here and this week’s are sponsored by Gallus Insight, which is transforming employee analytics into actionable insights. Gallus’ ROI tool for learning and development activity is the most powerful in the world, and also the easiest to use. Hear an interview with Ardley’s new AI Chatbot Leo, and Nathan Den Herder, mimicking a typical conversation between a potential borrower exploring mortgage options and an AI bot before being passed off to an originator.) Lender and Broker Services, Products, and Software Great news: ICE Experience 2026 session details are now available! You can now review 48 brand-new sessions (with even more coming soon) covering topics that will provide you with practical strategies to apply to your business right away. Whether you want to streamline operations using the latest Encompass® and MSP® solutions, explore breakthroughs in AI and automation or stay ahead of regulatory changes, you’ll discover actionable content tailored to your needs. ICE Experience 2026 is your gateway to innovation, collaboration, and real-world takeaways, all happening March 16–18, 2026, at Wynn Las Vegas. Don’t forget to use your 2025 budget, since prices go up January 17, 2026! Check out the full session lineup and get ready to transform your business!

Mortgage rates are tied to movement in the bond market and bonds were close enough to Friday’s levels that mortgage rates were essentially unchanged today. This keeps the average lender in the lower portion of the narrow range seen over the past 4 months.  If rates manage to move noticeably lower from here, they’ll be challenging the lowest levels in more than 3 years. Meaningful momentum may be hard to come by over the next 2 weeks. During that time, the bond market will be fully closed for 2 days, partially closed on 2 days, and much lighter in volume and participation for the rest of the time. This can lead to random, small-scale volatility but it rarely results in lasting momentum. For that, we’ll be waiting until the major econ data begins coming out in January–most notably the Jan 9th jobs report.