It ended up being a decent round trip for rates this week. Monday kicked things off with a jump to the highest level in more than a month, and the third highest since August 2025. But that ended up being the only day where rates went higher.  Wednesday brough the biggest chunk of the recovery with MND’s daily rate index dropping 0.10%.  Tuesday and Friday (today) each added a 0.02% drop, taking the index to 6.42% after ending last week at 6.44%. War-related headlines were less of a factor today and volatility was unsurprisingly lighter as a result. This is an adjustment for seasoned rate watchers who are used to monthly jobs report being a distinct source of volatility. It’s especially notable that the job count came in significantly higher with no ill effect on bonds/rates. Over the past 6 months, markets have shifted their jobs report focus from the payroll count to the unemployment rate, reversing decades of precedent. Today’s outcome is more logical in that context as the unemployment rate was right in line with expectations at 4.3%.

Mortgage applications declined last week, reversing some of the prior period’s gains as rates climbed to their highest level in a month. The Mortgage Bankers Association (MBA) reported a 4.4% decrease on a seasonally adjusted basis for the week ending May 1. The decline was broad-based, with both purchase and refinance activity moving lower. The Refinance Index fell 5% from the previous week but remained 29% higher than the same week one year ago. Meanwhile, the seasonally adjusted Purchase Index decreased 4% week over week and was still 5% above last year’s level. In the bigger picture, purchase apps remain closer to the highest levels of the past few years. The average 30-year fixed mortgage rate increased to 6.45% from 6.37%, marking the highest reading in a month and weighing on overall application volume. Higher borrowing costs, driven in part by ongoing geopolitical tensions, continue to limit refinance incentives while creating some hesitation among prospective buyers. MBA’s Joel Kan said, ” Mortgage rates last week increased to their highest level in a month… elevated rates and shrinking refinance incentives continued to weigh on activity… The refinance share of applications was the lowest since August 2025. ” Kan also noted that while purchase activity softened on a weekly basis, it remains above last year’s pace. The average purchase loan size rose to a record $467,300 , suggesting that higher-priced segments may be driving activity while some entry-level buyers hold back amid affordability pressures.

New home sales moved higher in March and February. Both months were reported on a single day this week as the Census Bureau continues catching up from the government shutdown.  After dropping to 587k in January, sales rose to 635k in February and 682k in March. This represents a solid bounce back into the center of the broadly sideways range that’s been intact for the past 2 years.  For-sale inventory edged slightly lower to 481,000 , down 0.4% from February and 4.6% below year-ago levels. At the current sales pace, months’ supply fell to 8.5 months , down from 9.1 months in February and 9.2 months one year ago. The decline reflects a combination of stronger sales and modestly tighter inventory. Prices moved lower on both a monthly and annual basis. The median sales price declined to $387,400 (-5.3% MoM; -6.2% YoY), while the average price slipped to $503,100 (-3.4% MoM; -1.2% YoY). The continued softness in pricing suggests a shift in the mix of homes sold and ongoing pressure on affordability.
Sales (MoM): +7.4%
Sales (YoY): +3.3%
Inventory (YoY): -4.6%
Months’ Supply: 8.5 (down from 9.1 prior month; 9.2 YoY)

If you haven’t signed up for the Mortgage Action Alliance, do so. It’s free, has good advocacy information, and there’s strength in numbers. Recent conference chatter includes suggesting that removing politics from the mortgage conversation would be a good thing to attempt, wondering if there’s enough regulatory manpower muscle to take the existing LO comp rules and re-jigger them, some believing that the recent credit score announcements are lacking leave much to be desired, asking why the Fed’s useful Twitter account (Financial Sentiment Index, TFSI) vanished, and suggestions that Southern California’s hottest nightclub was the main ballroom at Mortgage Innovators with its extensive techno play list. (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 Digital Risk’s Kim Lanham on how the Iran conflict and broader geopolitical uncertainty are influencing mortgage rates, borrower decision-making, servicing retention strategies, borrower assistance programs, and emerging credit and fraud risks across both Agency and non-QM lending.) Lender and Broker Products, Software, and Services Why Partnering with MSF as Your Sub-Servicer Is a Strategic Advantage: Built for Speed, Service, and Retention. In today’s mortgage servicing landscape, smaller institutions often find themselves working with sub-servicers built for scale, not responsiveness. The result: delayed borrower support, missed engagement opportunities, and lost relationships. MSF Servicing was built to solve that problem. MSF delivers a level of attention larger providers cannot match. Every borrower inquiry, issue, and client request is handled on a same-day or 24-hour basis, because in servicing, speed drives retention. Timely, empathetic responses keep borrowers engaged and relationships intact. Delays create friction; responsiveness builds trust. Led by an industry veteran with deep expertise in customer service and loss mitigation, MSF brings proactive engagement and retention-focused outcomes to every portfolio it manages. The result: a sub-servicing partner who moves at the speed your borrowers expect and delivers the care your brand demands. Contact Rick Smith at 860-989-9006.

Rocket Cos. fell just $200 million short of United Wholesale Mortgage in Q1, as servicing recapture from its massive MSR portfolio fueled $44.7B in closed loan volume.

The buyer will add around 800,000 loans to its hefty servicing portfolio, while Valon said it will shift away from servicing to focus on technology.

The new law, which will mandate the Bureau of Indian Affairs to approve or deny loan applications within 30 days, passed with wide bipartisan support.

The real estate technology company reduced its workforce and consolidated select vendor relationships. These moves will save the company roughly $2 million.

The lenders’ examples of using generative artificial intelligence were more practical than transformational, but in any case data challenges represent a common problem.

Another Mid-Day Reversal Driven by Dueling Headlines

The overnight session featured a modest but clearly-defined rally in response to hopeful headlines on the Iran war. But as early a 9am ET, a complete reversal was beginning to take shape. Bonds remained in positive territory until the 11am hour when war headlines kicked selling into higher gear. Specifically, reports suggested Iran rejected the U.S. framework that helped bonds overnight. Separate news cited CIA sources, claiming Iran can withstand a Hormuz blockade for months. Selling continued in the afternoon on reports that had more to do with escalation risks (Saudi Arabia and Kuwait allowing U.S. forces to operate from their bases, explosions heard in Southern Iran). All told, 10yr yields were up more than 4bps by 3pm and MBS were down a quarter point.

Econ Data / Events

Challenger layoffs (Apr)

83.387K vs — f’cast, 60.62K prev

Continued Claims (Apr)/25

1,766K vs 1800K f’cast, 1785K prev

Jobless Claims (May)/02

200K vs 205K f’cast, 189K prev

Unit Labor Costs QoQ FinalQ1

2.3% vs 2.6% f’cast, 4.4% prev

Market Movement Recap

08:32 AM stronger overnight and no reaction to econ data. MBS up an eighth and 10yr down 1.5bps at 4.331

11:31 AM moving into weaker territory now. MBS down 1 tick (.03) and 10yr up 1.4bps at 4.361

01:13 PM New lows for MBS, down 5 ticks (.16) on the day. 10yr up 3.4bps at 4.38

03:00 PM MBS at new lows, down 9 ticks (.28) and 10yr up 4.3bps at 4.39