Steady Gains After Slightly Weaker Start

Bonds began the day in slightly weaker territory, but not for any particular reason (and certainly for no interesting reasons). For those who care about such things, the yield curve continued to steepen (shorter term yields outperforming longer term yields), but this is fairly irrelevant to the mortgage world as MBS are relatively neutral in curve trading terms (durations are short enough not to get hurt when 30yr bonds are hurting, and long enough to avoid getting hurt when 2yr yields are hurting). Speaking of the neutral part of the curve, today’s 5yr auction ended up fairly strong and the reaction helped yields hit their best levels of the day in the afternoon.  That said, all of the above is playing out on a micro scale in the bigger picture.  We’re basically just drifting from one jobs report to the next.

Market Movement Recap

09:32 AM fairly flat overnight with some selling at 8:20am CME open. MBS down 2 ticks (.06) and 10yr up 1.7bps at 4.281

01:05 PM No major reaction to ho-hum 5yr auction.  MBS up 1 tick (.03) and 10yr down 1.5bps at 4.251

03:07 PM holding near best levels with MBS up 2 ticks (.06) and 10yr down 2.5bps at 4.239

It continues to be the case that day-to-day changes in average mortgage rates are very small. Today was no exception in that regard. Nonetheless, today represents a technical “record low” for 2025 with average rates edging just slightly lower than those seen on August 22nd and 26th. Our index (which tracks top tier, conventional 30yr fixed rates for ideal scenarios) is now 6.51%, the lowest it’s been since October 3rd 2024 when it was 6.26%. Virtually all of the recent improvement in rates followed the August 1st jobs report. Everything since August 4th has transpired in a relatively narrow range.  There was no new development that accounted for today’s improvement–just a random drift that happened to work out in our favor.

Mortgage application activity was little changed last week, with only a fractional decline in overall volume. The Mortgage Bankers Association’s weekly survey showed a 0.5% decrease in the seasonally adjusted Composite Index for the week ending August 22, 2025. “Mortgage rates inched higher for the second straight week, with the 30-year fixed-rate up to 6.69 percent. While this was not a significant increase, it was enough to cause a pullback in refinance applications,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Purchase applications had their strongest week in over a month, up 2 percent, and the average loan size increased to its highest level in two months at $433,400.” The Refinance Index fell 4% from the previous week but remains 19% higher than the same week a year ago. The Purchase Index rose 2% on a seasonally adjusted basis and is running 25% ahead of last year’s level. The refinance share of total mortgage applications decreased to 45.3%. ARM share declined to 8.4%. FHA share held steady at 19.1%, while VA share slipped to 13.3%. Mortgage Rate Summary:
30yr Fixed: 6.69% (from 6.68%) | Points: 0.60 (unchanged)
15yr Fixed: 6.03% (from 5.96%) | Points: 0.77 (up from 0.70)
Jumbo 30yr: 6.67% (from 6.64%) | Points: 0.44 (down from 0.60)
FHA: 6.35% (from 6.39%) | Points: 0.80 (up from 0.66)
5/1 ARM: 5.94% (from 6.01%) | Points: 0.68 (up from 0.63)

The latest New Home Sales report showed little change in July, with sales holding very close to June’s pace. The seasonally-adjusted annual sales rate came in at 652,000. This marks a -0.6% dip from June’s revised 656,000, and leaves sales -8.2% lower than July 2024’s 710,000 level. For all practical purposes, the pace of sales continues to run sideways, reflecting the same stable range seen over the past 2+ years despite periodic swings. Regional Breakdown (Sales, July 2025)
South: -3.5% MoM
Midwest: -6.6% MoM
Northeast: unchanged MoM
West: +11.7% MoM
Market Inventory & Pricing
Homes for sale: 499,000 units (-0.6% from June; +7.3% YoY)
Months’ supply: 9.2 months (flat MoM; +16.5% YoY)
Median sales price: $403,800 (-0.8% MoM; -5.9% YoY)
Average sales price: $487,300 (-3.6% MoM; -5.0% YoY)
Big Picture Takeaway July’s new home sales data reinforces the recent pattern: demand is steady at best, but not accelerating. Inventory remains elevated, keeping months’ supply near multi-year highs. While prices have softened meaningfully versus last year (reflecting lower square footage more than actual price declines), elevated housing costs continue to limit the benefit to buyers.

Legal experts say President Trump’s unprecedented move to fire Cook over alleged past misconduct will likely be hashed out in court, but there is little precedent to determine whether a sitting board governor can be removed for past actions.

The bank “temporarily” paused home equity line of credit lending in April 2020, over concerns regarding the economic impact of the Covid-19 pandemic.

The new affiliate, NAF Insurance Services, is teaming up with The Baldwin Group to offer a range of coverage from more than 50 carriers nationwide.

The judge sided with Massachusetts officials in a review of their lawsuit against Hometap, who pushed back on descriptions of its products as “illegal” loans.

A proposed rule published Tuesday in the Federal Register would limit the Consumer Financial Protection Bureau’s ability to designate nonbank entities for supervision.

Mortgage rates tend to move at least a little every day although they haven’t been moving too much in the bigger picture recently. The only truly memorable move int he past few months occurred after the August 1st jobs report. It resulted in a 2-day drop from 6.75% to 6.57%.  The next closest contender was last Friday’s reaction to Fed Chair Powell’s Jackson Hole speech which took the index from 6.62 to 6.52.  So far this week, we’ve been holding very close to those levels.  Yesterday saw a modest bump and today pushed rates back down to Friday’s levels. The end. This week’s movements could be classified as incidental, random drift.  Such a trend is a logical interlude separating the news and events that actually matter to the big picture rate trend. Barring a major, unexpected development, the next high-consequence event is the jobs report due out next Friday. It would be no surprise to see a fairly drifty trend prevail until then.