Mortgage rates are based on bonds and bonds can do funny things on the first and last trading days of any given month. One of the most common “funny things” involves a decent amount of market movement for no apparent reason. In truth, there are always reasons, but on the first/last trading day of the month, they aren’t the normal reasons (such as a reaction to economic data), and they’re too esoteric to merit an explanation for the amount of movement seen today. There are some less esoteric motivations in play as well. US bonds often take cues from European bonds when there isn’t anything more compelling to offer directional guidance, and European bonds had a bad morning. The spillover to US bonds was apparent in the overnight hours.  Lastly, some news stories speculated that legal challenges to Trump tariffs could be contributing to higher rates. This highly unlikely given the timing of the news (it happened just after markets closed on Friday). If this were a motivation, it would have been apparent right when trading began for the new week on Sunday night in Asia. Instead, it wasn’t until European markets opened that the bond market began pointing toward higher rates. Motivations aside, rates didn’t move too much higher. In terms of top tier 30yr fixed rates, the total damage was 0.03%, thus leaving the average lender right in line with the lowest levels since October 2024.

What’s old is new again? In Vermont, one man is refurbishing payphones for people to use for free. Very cool. Debt isn’t old or new, but how we treat it is. On today’s episode of Advisory Angle at 2PM ET, STRATMOR experts Garth Graham, Nicole Yung, and Sue Woodard explore how home equity fits into today’s mortgage landscape. With refinancing largely on hold in a high-rate environment, home equity products are giving lenders, and their borrowers, important new options. The team looks at where the opportunities are right now. Reported numbers vary somewhat, but there are roughly 6 million delinquent student loans. The Treasury & Department of Education are allegedly going to start garnishing wages in October. That impacts mortgages how? 35-40 percent of GNMA borrowers have student loans, and HUD’s guide states no loan modifications if a borrower is delinquent on their student loans. So if a lender is trying to help a client, not only are they dealing with mounting homeowner insurance costs ($500-1,000 a month), but if their wages are being garnished ($500 a month) then what does that do to both their ability to qualify and their delinquencies in other consumer debt categories? (Today’s podcast can be found here and this week is sponsored by Gallus Insights. Mortgage KPIs, automated, at your fingertips. Gallus allows you to turn data from your various databases and systems into automated business intelligence and actionable insights. Hear an interview with Elysian Fields’ Jordan Higgins on how intentional micro-wellness can combat burnout, boost focus, and bring accessible, joyful wellness to today’s screen-heavy workplaces.)

The Tuesday after Labor Day can have a mind of its own when it comes to financial markets–especially if it also happens to be the trading day of the month. Last week’s month-end trading environment gave bonds an artificial, temporary boost and some of this morning’s weakness could simply be due to the type of reversal often seen at the start of a new month. On more specific notes, EU inflation came in higher than expected and bond yields in several EU countries are at long-term highs (UK yields highest since 1998!). Despite thin trading conditions forex clearly showed a surge at the 3am EU open.

There is also the matter of a lower court ruling on the legality of tariffs. There’s some speculation that this could result in tariffs needing to be paid back–something that would definitely hurt the bond market as it would imply additional Treasury issuance. We think it’s far too soon to jump to such conclusions and while it could have a bearing on some early trading decisions, it wouldn’t be a thematic driver until far more clarity is achieved several months down the road.  Either way, damage is limited in the U.S., but still apparent with 10yr yields starting the day roughly 7bps higher. Weaker ISM Manufacturing data is helping erase some of the overnight losses, thus making a somewhat alarming morning only slightly unpleasant. 

The D.C. District Court held a hearing this morning and defendants filed briefs in a case to determine whether Federal Reserve Gov. Lisa Cook will remain on the Federal Reserve Board after her ostensible firing by President Trump earlier this week. No ruling was issued, but one is expected before the FOMC votes in mid-September.

Most big banks saw modest reductions in their requirements following this year’s stress tests. The results come as the Fed prepares to smooth year-to-year swings with a new averaging rule.

The new AD Home portal helps the company’s mortgage brokers’ business by giving their customers a more intuitive, online technology to manage their loans.

Mortgage lenders with servicing operations will have more access to automation that cancels surety bonds soon and will need a new registration to accommodate it.

US Treasuries retained most of their recent gains as anticipation of Federal Reserve interest rate cuts held firm after the central bank’s preferred gauge of inflation matched economist estimates.

Housing regulator Bill Pulte lodged more fraud allegations against Fed Governor Lisa Cook as she filed a temporary restraining order regarding attempts to remove her.

The lawsuit accuses Village Capital of failing to pay full price for servicing assets and refusing to reimburse Change for a large Ginnie Mae payment.