Mortgage rates are based on bonds, and bonds spent last week bracing for the impact of higher energy prices. In the bond world, higher inflation begets higher rates, all else equal.  Oil prices remain elevated, but fell more than 5% on Monday. The bond market responded with a drop in Treasury yields (which generally correlate with mortgage rates). Both the 10yr Treasury yield and the average top-tier 30yr fixed mortgage rate fell 0.06% on the day. That means mortgages are now at the highest levels in only 3 months after being at 7-month highs on Friday afternoon.  [thirtyyearmortgagerates]

With no massive escalation in Iran over the weekend, oil prices trickled only modestly higher during Asian trading hours and began to recover during European hours. Early domestic trading kept the friendly trend intact with some help from Trump comments that suggested a limited timeline for the war. That said, the rally was more of a linear trend this morning and less of a volatile reaction to any individual newswire. Econ data is in the back seat to geopolitical events. The same will generally be true for Wednesday’s Fed announcement, although volatility is at least possible thanks to the dot plot and press conference (rate cut = 0% chance).

NOTE: you will never see a true 0% chance in terms of probability implied by futures contracts due to the structure of that market, but 99% = 100% and 1% = 0% for all practical purposes. 

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A White House executive order issued Friday afternoon directing regulators to ease Dodd-Frank compliance burdens comes as a bipartisan housing bill advances on Capitol Hill.

Borrower equity fell $78.8 billion, or 0.5%, year over year in Q4, according to Cotality’s Home Equity Report. That’s an average decrease of $8,500.

A federal judge wrote in an opinion that a “mountain of evidence” suggests the subpoenas were an effort to push Federal Reserve Chair Jerome Powell to lower interest rates or resign.

Federal bank enforcement actions have dropped sharply since the start of the second Trump administration, but experts’ views vary about whether less enforcement will result in a buildup of risk in the financial system.

Lennar’s first fiscal quarter earnings were down by more than half after three years of persistent trials which are testing consumer confidence and sentiment.

Just a Bit More Selling to End The Week

Nothing much new happened in the bond market today and that’s not great because the status quo has been for rising energy prices to push bond yields higher (and stocks lower). The short end of the curve actually improved, but that says more about end-of-week position squaring than any new development.  All told, it was the least painful day of the week despite ending at the highest yields since Feb 4. Next week brings a Fed announcement with zero chance of a cut, but still perhaps some interesting commentary on how the Fed will sort inflation implications versus the economic impact.

Econ Data / Events

Core Retail Sales (Jan)

0% vs 0.5% f’cast, 0.6% prev

Core PCE (m/m) (Jan)

0.4% vs 0.4% f’cast, 0.4% prev

GDP Q4

0.7% vs 1.4% f’cast, 4.4% prev

USA JOLTS Job Openings (Jan)

6.946M vs 6.70M f’cast, 6.542M prev

Market Movement Recap

08:33 AM Sideways to slightly stronger and a modestly positive reaction to the 8:30am data. MBS up an eighths and 10yr down 1.34bps at 4.252

11:47 AM MBS down an eighth of a point and 10yr up 1.3bps at 4.278

01:21 PM flattening out at weakest levels.  MBS still down an eighth and 10yr up 1.9bps at 4.284

Existing-home sales rebounded modestly in February, recovering some ground after January’s sharp pullback, while improving affordability and slowly expanding inventory helped support buyer activity.Sales rose 1.7% to a seasonally adjusted annual rate of 4.09 million .  “Housing affordability is improving, and consumers are responding,” said NAR Chief Economist Lawrence Yun. The group’s Housing Affordability Index rose to 117.6 in February, the highest reading since March 2022 and the eighth consecutive monthly improvement. Yun noted that wage growth is now outpacing home-price growth by nearly four percentage points, while mortgage rates are also lower than a year ago. Inventory continued to expand, though at a measured pace. Total housing inventory increased to 1.29 million units , up 2.4% from January and 4.9% higher than a year earlier. That equates to a 3.8-month supply of homes at the current sales pace. Price growth remained subdued but positive. The median existing-home price for all housing types rose to $398,000 , a modest 0.3% increase from a year ago and the 32nd consecutive month of annual gains. Regional Breakdown (Sales and Prices, February 2026)

Region
Sales (annual rate)
MoM Change
Median Price
YoY Change

Northeast
470k
-6.0%
$479,800
+3.3%

Midwest
940k
+1.1%
$302,100
+2.3%

South
1.89m
+1.6%
$356,800
+0.2%

West
790k
+8.2%
$603,100
-1.9%