Mortgage rates are based on bonds and bonds, and bonds have some seasonality to them.  This doesn’t necessarily mean there’s a reliable seasonal pattern for the direction of rate movement.  Rather, it means that several weeks in August tend to be fairly forgettable in terms of excitement, volatility, and methodical movement.  The 2 most recent weeks arguably fit that bill.  Bonds (and, thus, rates) are still operating in the range seen in the 24 hours following the August 1st jobs report.  Mortgage rates have been in an even narrower range than the broader bond market.  For example, 10yr Treasury yields (often viewed as a benchmark for mortgage rate movement) are well over halfway back up to the levels seen before the jobs report.  Mortgage rates, meanwhile, aren’t even a quarter of the way back. Specifically, 10yr yields were around 4.40% and fell to around 4.20% after the jobs report.  They’re now back up to 4.30% and were as high as 4.35% yesterday.   Mortgage rates were 6.75% before the jobs report and fell as low as 6.53% afterward.  They’re at 6.59% today (top tier scenario, average). There have been no major influences for rates so far this week and there aren’t any major threats on the calendar of scheduled events until Friday at the earliest.  This doesn’t mean rates can’t move until then, only that they are not going to be moving in response to scheduled economic data.

Slow, Steady, Modest Improvement

Bonds are in the throes of the summertime “blahs.” In other words, excitement and high-conviction trading are in short supply. Instead, prices and yields are drifting in a broadly sideways path with minimal day to day movement. Motivations are non-existent and the numbers on the screen are incidental byproducts of non-data-driven hedging and position squaring.  It’s easier to just say “the blahs.”  Thankfully, the blahs aren’t always bad.  Today’s blah were pretty OK with 10yr yields hitting the 3pm close with a few bps of improvement and MBS holding a 1 tick (.03) improvement for most of the day. Motivations remain in short supply in the near term.  Wednesday’s Fed Minutes won’t have any revelations that haven’t already come to light in Fed speeches. Powell’s Friday speech at Jackson Hole is the only scheduled event with teeth, and those teeth are nowhere near as sharp as something like the jobs report.

Econ Data / Events

Building Permits (Jul)

1.354M vs 1.39M f’cast, 1.393M prev

Housing Starts (Jul)

1.428M vs 1.29M f’cast, 1.321M prev

Market Movement Recap

09:30 AM modestly stronger overnight.  10yr down 1.7bps at 4.319. MBS up 1 tick (.03)

12:51 PM 10yr down 2.7bps at 4.309 and MBS still up 1 tick (.03)

04:10 PM 10yr down 2.9bps at 4.307.  MBS still up 1 tick (.03).

If yesterday was marked by incidental weakness, today is shaping up to be the opposite.  In fact, yields and MBS prices are right in line with Friday’s latest levels in early trading (now moving lower), as if Monday never even happened.  “Incidental” remains a valid theme for most of the week.  Fed Chair Powell’s Jackson Hole speech is just about the only event with any reasonable volatility potential.  Other than that, we’re counting the hours until the next jobs report (almost 2 weeks away) and generally forgiving any bond market movement that remains inside a 10yr yield range of 4.2 – 4.4.

Most of the pool, 68.6%, is in the repayment phase, while 19.1% of the loans in the pool are in deferment.

The Office of Management and Budget under President Donald Trump has not apportioned any discretionary awards to financial institutions in the fiscal year of 2025, according to new documents released by the agency.

The tests modeled how Fannie Mae and Freddie Mac would fare after absorbing losses like a total $36.1 billion provision in credit losses in a severe downturn.

Among the nation’s 50 largest metropolitan areas, 25 had annual price increases in July, while the others recorded price declines, Zillow found.

The since-defunct lender, which was purchased by Newrez in 2021, agreed to pay a $1.8 million penalty and has refunded over $550,000 to borrowers.

As I type this, I’m at the doctor’s office, and some guy a few seats over is booing all the names being called that aren’t his. Do you boo the products that you don’t have? Non-Agency lending, much of it in the form of non-QM loans, has been moving steadily higher at the expense of Freddie Mac’s and Fannie Mae’s market share. Are rates helping? I went back and looked at January 2 of this year. The 2-year Treasury was yielding 4.20 percent, and the 10-year was yielding 4.52, a difference of 32 basis points. Today we have them at 3.74 and 4.29, a difference of 55 basis points, so this difference, one measure of the steepness of the yield curve, has doubled. It is steeper. How’s your adjustable-rate product offering? ARMs now account for nearly 10 percent of applications, per the MBA. Our biz could certainly use a little boost: According to Curinos’ proprietary application index, refinances decreased 20 percent in July; the purchase index decreased 28 percent for July as a whole. July 2025 funded mortgage volume increased 2 percent YoY and decreased 2 percent MoM. (Curinos sources a statistically significant data set directly from lenders to produce these benchmark figures. We drill into this data further here.) (Today’s podcast can be found here and this week’s is sponsored by FirstClose. FirstClose provides fintech solutions to HELOC and mortgage lenders nationwide, increases profitability and reduces costs for mortgage lenders through systems and relationships that enable lenders to assist borrowers more effectively and ultimately shorten closing times. Hear an interview with NFTYDoor’s Mark Schacknies on the reshaping of mortgage lending: from lightning-fast HELOC approvals and real-time AI underwriting to a human-plus-tech model that prioritizes loan officers over direct-to-consumer disruption.)

Mortgage rates are as high as they’ve been on almost any other day this month.  You’d have to go back to August 1st to see anything higher.  On the other hand, rates are still noticeably lower than almost any other day of the past 10 months.  It’s really only the past 2 weeks that have been any better and the gap between recent highs and lows is very small. In other words, rates have been holding a narrow range near 10 month lows in August.  There’s been a modicum of upward drift over the past few days, but no material developments.  This week will be fairly light in terms of sources of potential volatility. Once upon a time, the market may have worried about the impact from the Fed’s Jackson Hole Symposium. While Fed Chair Powell could say something that causes a reaction in rates at the end of the week, it wouldn’t be on the same scale as something like a surprising result in the jobs report or inflation data.