Mortgage rates spiked sharply on Monday, hitting the highest levels in more than a month as escalation fears ramped up surrounding the Iran war. Yesterday technically saw some recovery, but it may as well have been an “unchanged” day. Now today, we’re seeing a more legitimate recovery with the average lender back down to last Friday’s levels. The move follows a drop in oil prices inspired by progress toward a peace agreement. News came out overnight that The U.S. and Iran were close to signing a one-page memo outlining a more formal peace agreement. While full details would take time to hammer out, this would effectively end the war. Oil prices and bond yields fell at their fastest pace since mid April. Bond yields correlate with interest rates (in fact, they ARE interest rates), but mortgage rates are determined by slightly different bonds that are specific to the mortgage market. This means that mortgage rates and U.S. Treasury yields are almost always moving in the same direction, but at different paces, depending on the day.  [thirtyyearmortgagerates]

“What do you call an aging actor who has finally paid off his house? Mortgage freeman.” Servicing is a highly important component of that, and I was fortunate to attend Sagent Ignite in Phoenix yesterday; we have a special live podcast today that was recorded from the event. Mortgagees follow demographics, whether it be aging owners or aging houses. Lenders know that there are plenty of old homeowners who have plenty of equity. GreenPath Financial Wellness (a nonprofit approved by the U.S. Department of Housing and Urban Development -HUD – and the National Foundation for Credit Counseling) reviewed data from its reverse mortgage counseling clients over the past two years. It found that more older homeowners are turning to home equity to close widening monthly budget gaps. Meanwhile, our housing stock isn’t getting any younger. The median home in the United States is at a record 44 years old, as new unit construction is still well shy of what it had been in the past. One ramification of this is that it’s getting more expensive to maintain those homes. The average homeowner in the United States spent $9,030 on replacement projects in 2023, up 59 percent from 2009. (Today’s podcast can be found here and this week’s ‘casts are sponsored by FirstClose, which provides fintech solutions to HELOC and mortgage lenders nationwide. Their home equity lending platform accelerates the home equity lending process, reducing application to closing times from 45 days to less than ten. Today we have an interview with Chris Marshall of Sagent at its 2026 Ignite Conference, as well as Scott Rodeman (Evergreen Home Loans), Chris Wittrig (Land Home), and Jane Roethler (Idaho Housing and Finance Association) on the latest and greatest in servicing technology.)

There was one, big, obvious market mover overnight. At 4:50am ET, Axios reported that the U.S. and Iran are close to signing a one page memo of understanding to end the war. Oil and bond yields were already in recovery mode, but this kicked things into higher gear. Most of the gains remain even after both sides offered refutations (which the market now perceives as merely a negotiation tactic). Subsequent reports from other sources also speak to specific details in the peace deal that seem to specific to be made up. In early trading, ADP employment data had no impact and Treasury’s confirmation of unchanged auction sizes helped bonds hold the overnight gains.

Finance of America’s earnings per share came out to $1.10, double that of the first quarter of 2025 and well above the a S&P Capital IQ Pro consensus estimate of $0.84.

PennyMac Financial Services reported $82.3 million net income, inclusive of a $44 million net reduction related to servicing fair value and hedge losses.

The lender and servicer, which continues to make investments ahead of a future high-demand cycle, has reported tumbling margins in the past year.

Credibly will bring its SMB loans and revenue-based financing products to Figure’s Democratized Prime platform, Figure said in a press release.

Federal Reserve Gov. Michael Barr said Tuesday that the U.S. energy sector is more insulated from shocks than Europe’s, particularly in natural gas prices. However, he warned that the war is pushing up gasoline prices, which could spill over into other parts of the economy.

Data Didn’t Hurt, But Bonds Underperformed The Oil Price Recovery

Today’s headline is somewhat misleading. It points out the fact that oil prices made it back to yesterday’s lows whereas bond yields didn’t even come close. This is all true, assuming we’re looking at front month oil prices. But if we use a longer-term futures contract for oil, the correlation with bonds was actually closer to 1:1. Either way, the bond rally only unwound a fraction of yesterday’s losses and that’s especially true for MBS (5.0 coupons lost half a point yesterday, but regained less than a quarter point today). Econ data didn’t hurt, but it didn’t exactly help either. ISM and Job Openings were both very close to consensus.

Econ Data / Events

Trade Gap (Mar)

-60.30B vs $-60.9B f’cast, $-57.3B prev

S&P Global Services PMI (Apr)

51.0 vs 51.3 f’cast, 49.8 prev

ISM Biz Activity (Apr)

55.9 vs — f’cast, 53.9 prev

ISM N-Mfg PMI (Apr)

53.6 vs 53.7 f’cast, 54.0 prev

ISM Services Employment (Apr)

48.0 vs — f’cast, 45.2 prev

ISM Services New Orders (Apr)

53.5 vs — f’cast, 60.6 prev

ISM Services Prices (Apr)

70.7 vs — f’cast, 70.7 prev

New Home Sales (Mar)

682K vs 0.65M f’cast, 587K prev

USA JOLTS Job Openings (Mar)

6.866M vs 6.84M f’cast, 6.882M prev

Market Movement Recap

09:04 AM Modestly stronger overnight with bonds following oil prices. 10yr down 1.5bps at 4.422 and MBS up an eighth.

10:08 AM Slightly stronger after 10am data. MBS up 5 ticks (.16) and 10yr down 2.7bps at 4.41

12:14 PM best levels of the day. 10yr down 3.2bps at 4.406 and MBS up a quarter point.

02:42 PM Off best levels. MBS up 5 ticks (.16) and 10yr down 2bps at 4.419

One popular refrain in the mortgage industry is that rates take the escalator on the way up and the stairs on the way down. Yesterday was definitely an “escalator” sort of day with the average lender moving up 0.12% for a top-tier 30yr fixed rate. Based on improvement in the bond market, rates are lower today, but just barely. It’s not so much that rates are taking the stairs down, but more like they’re a small child, waiting at the top of the staircase–afraid to take that first step. Some lenders are not even lower compared to yesterday’s levels. Others are only modestly better. The absence of better improvement is at least partly attributable to the slower movement in the underlying bond market. Specifically, today’s bond rally (good for rates) is less than one third the size of yesterday’s sell-off (bad for rates).