It depends what one’s definition of “recent” is, but if it involves the past few weeks, mortgage rates were at their highest recent levels both yesterday and today.  2 other days in that window were worse, but only microscopically.  On a positive note, the entirety of the past few weeks has seen rates calmly holding a narrow range at the lowest average level since early October 2024.   If it’s not already clear, today did nothing to change the prevailing trend, even though the underlying bond market suggested rates should move higher.  As we discussed yesterday, bonds can say one thing and mortgage rates can do something else depending on the time of day and the pace of market movement.  Today was just another example as the bond market movement that suggested higher rates happened too late in the day for most lenders to react.  The tacit implication is that rates will be slightly higher tomorrow if the bond market remains in the same territory between now and tomorrow morning. 

Anyone who thinks politics doesn’t impact residential lending isn’t, frankly, paying attention. Let’s start with something simple, like… interest rates. Rates, including mortgage rates, are influenced by economic activity, and we can all agree that tariffs figure into that. We’ve all heard the case in favor of tariffs over the last year. But Republicans are well aware of Ronald Regan’s thoughts on tariffs. Economists Paul Krugman and Milton Friedman had their thoughts on tariffs. Let’s hope that the Trump Administration is right! How about Freddie Mac and Fannie Mae? Informal chatter among us capital markets folks have a rise in Agency conversations about buybacks, possibly because of Agency uncertainty or because of them wanting to be “first in line” if things become rough. But wait… there’s more! Yesterday Bill Pulte (the Director of the FHFA, conservator of F&F) posted on X (yes, owned by Elon Musk) that Freddie and Fannie would terminate any SPCPs (Special Purpose Credit Program… think, helping economically disadvantaged groups; more below). But wait… there’s more: see below. (Today’s podcast can be found here and this week’s is sponsored by ICE. ICE offers an interconnected digital mortgage ecosystem to help clients improve productivity, reduce costs, and deliver a meaningful customer experience. Today’s has an interview with Servbank’s JoAnne Gonzalez on how servicers invest in technology and people to drive the best outcomes and results.) Correspondent and Wholesale Loan Programs

The first 3 days of this week have all generally seen yields at the highest levels in a month (or perhaps in “at least 28 days” considering Feb’s day count). While that doesn’t sound like an overly pleasant turn of events for the bond/mortgage market, the reality is far less threatening, for now.  It is true that if today’s session closes at present levels, they will be the weakest since Feb 24th, but it’s also true that those levels aren’t too far from recent lows.  The modal range floor is 4.19% in 10yr yields. We’re just under 4.36% this morning–just gently testing the 4.34% range ceiling. Some technicians would argue that the opening gap from Feb 25th still needs to be filled before we find out what’s next.

The Federal Housing Finance Agency’s withdrawal of tenant requirements and an unfair and deceptive acts and practices bulletin sets the tone for the future.

Wall Street veteran Frank Bisignano pledged at a Senate Finance Committee hearing that he doesn’t plan to privatize Social Security.

HUD and DHS entered into an agreement which would place a HUD staffer inside Homeland Security and make referrals for immigration enforcement.

Pent-up demand and the rapid pace of home appreciation is fueling the ongoing rise in home prices, even as mortgage rates present obstacles for buyers.

Learn how bridge loans and hard money loans work, their pros and cons, and discover which option suits your needs.

Overnight Weakness Gives Way to Modest Gains

In absolute terms, it was a moderately active day for bonds as 10yr yields moved inside a respectable 7bp range (4.37 to 4.30). In day-over-day terms, we’re left with merely modest gains, but no one’s complaining. Early trading raised concerns about a technical break above the 4.34 ceiling. As we discussed yesterday, such breakouts can just as often serve as cues for buyers to get back in the pool, and that appears to have been the case today. Stocks had one of their calmest sessions in recent memory and bonds didn’t exhibit any of the typical correlation.  U.S. bond traders simply showed up in line to buy some bonds, and that was that.

Econ Data / Events

Consumer Confidence 

92.9 vs 94.0 f’cast, 98.3 prev
lowest reading since July 2022
expectations index 65.2 vs 72.9 prev

Market Movement Recap

09:42 AM Weaker overnight, but stronger after 8:20am CME Open.  10yr down half a bp at 4.337 and MBS up 1 tick (.03)

12:51 PM Bond rally continues.  MBS up an eighth and 10yr down 4.2bps at 4.3

03:49 PM Off the best levels, but still stronger.  MBS up 2 ticks (.06) and 10yr down 3bps at 4.312

One of the key principles of mortgage rate movement has to do with the frequency of mortgage rate changes.  Specifically, mortgage lenders prefer to update rates once per day. This is notable because mortgage rates are based on bonds, and bonds are constantly trading.  The compromise is that mortgage lenders will indeed change rates more than once a day, in cases where bonds move enough to force their hands. This concept is relevant today because it explains why rates are both higher and lower, depending on the lender in question. Yesterday, bonds were moving in such a way that prompted some lenders to raise rates in the afternoon.  Other lenders held steady and simply raised rates this morning instead.  Lenders who raised rates yesterday were fairly close to the same levels this morning, and many of them were actually slightly lower. On overage, though, this morning’s rates were higher than yesterday’s.   To make matters just a bit more confusing, we’re once again seeing enough market movement for lenders to make mid-day changes today, but this time, it’s in a friendly direction.  A small handful of lenders have offered modest improvements, but even if every lender followed suit, yesterday morning’s rates would still be slightly lower.  To repeat a phrase from yesterday, yes, this is much ado about nothing.  Top tier, conventional 30yr fixed rates are still orbiting 6.75% in a calm, narrow range in the bigger picture.