After enjoying a calm, steady winning streak so far this week, mortgage rates finally experienced a bump back toward slightly higher levels on Thursday. The move followed the release of a closely watched report on the manufacturing sector. The economic data wasn’t strong in outright terms.  In fact, it suggested contraction in the sector. But what matters is that it was stronger than the market expected. In general, stronger data causes weakness in the bond market which, in turn, results in mortgage lenders offering higher rates. Today’s change was just as small as any other day this week. Specifically, The average borrower would barely see a change from yesterday. Volatility remains a risk, however, with the release of even more important economic data tomorrow morning.  At 8:30am ET, the Labor Department releases the Employment Situation (the official name for what everyone simply refers to as “the jobs report”). No other economic data has a more consistent track record of inspiring change in the rate landscape.  That said, keep in mind that the potency of any given report is all about  potential.   That potential is only realized if the results are much higher or lower than forecast.

Citizens Financial Group’s promotion of Brendan Coughlin to company president comes at the same time as CFO John Woods prepares to leave for State Street. Both executives have been viewed as potential successors to CEO Bruce Van Saun.

The company maintained its guidance for the year as the bottom line returned to the black in the first quarter, officials reported in an earnings call.

The move builds out a fee-based resolution for certain loan flaws piloted in 2024, which was set for a full 2025 rollout prior to changes in federal leadership.

Mortgage servicing rights owners making their plans for 2025 are dealing with additional stress beyond the normal opaque nature of the business, SitusAMC said.

The wholesale lender dubbed the development a “huge win” for itself and the broker community.

Action Packed Calendar But No Major Action in Bonds

This morning’s economic calendar was certainly the most action-packed of the present week. GDP had something for everyone. The evening news can no doubt harp on the “negative” headline while the financial market immediately understood the impact of a massive surge in imports. Numbers that exclude those accounting impacts make domestic consumption look normal and right in line with last quarter. Inflation was tame, but traders are waiting for future, tariff-affected reports. Treasury issuance was confirmed to hold flat, and the “massive” 6% increase in pending home sales is like a team who won 2 games this year vs 1 game last year saying their won 100% more.  By the end of the day, bonds were almost perfectly unchanged, even after month-end trading brought a big of volatility at 3-4pm ET.

Econ Data / Events

Employment Cost Index

0.9 v 0.9 f’cast, 0.9 prev

GDP

-0.3 vs +0.3 f’cast, 2.4 prev

Core PCE QoQ

3.5 vs 3.3 f’cast, 2.6 prev

GDP Final Sales

-2.5 vs +3.3 prev

Monthly core PCE

0.0 vs 0.1 f’cast, 0.4 prev

Market Movement Recap

09:47 AM Initially weaker following data, but bouncing back on safe-haven buying (stock selling). MBS up 1 tick (0.03) and 10yr down 1.9bps at 4.157

10:22 AM Choppy trading, but generally resolving toward strength.  MBS unchanged and 10yr down 1.4bps at 4.163

12:58 PM Still mostly sideways, with choppy trading dying down.  MBS unchanged and 10yr down 1.2bps at 4.165

03:43 PM A bit stronger after 3pm month-end bond buying.  MBS up 2 ticks (.06) and 10yr down 2.6 bps at 4.15

I don’t know where April went, but we’re at the end of it, and 2025 is 1/3 over. The future sure quickly becomes the past. In the book “1984” George Orwell observed, “Who controls the past controls the future. Who controls the present controls the past.” What does that have to with today, or with residential lending? There’s no problem if there’s no one to research it, report on it in the news, or write about it, right? Of course, weather, which is related to the world’s climate, impacts servicers, insurance companies, and lenders. In this case, the Trump Administration has fired the entire U.S. climate panel: What it means for future research? The recent decision of the Trump administration to dismiss 400 authors of the National Climate Assessment will impact climate research and sideline people from knowing the impacts of climate change. Don’t forget that, a few months ago, hundreds of federal NOAA employees, including weather forecasters, were fired as part of DOGE cuts, as reported by Fox. (Today’s podcast can be found here and this week is sponsored by CreditXpert, the credit optimization platform that helps today’s top mortgage originators and more than 60,000 mortgage professionals qualify more applicants, make more competitive offers, reduce LLPA premiums and close more loans. Hear an interview with LendingTree’s Matt Schulz on the most attractive states for out-of-state home shoppers.) Software, Products, and Services for Lenders and Brokers

Mortgage rates continue enjoying a completely different volatility regime compared to just a few weeks ago.  Back then, it wasn’t a surprise to see the top tier average rate move by more than 0.10% on any given day, nor was it uncommon to see multiple changes during the same day. Fast forward to the present week and the average lender hasn’t strayed from Friday’s levels by more than a few hundredths of a percent. Moreover, the “straying” has been exclusively in a friendly direction.   Today’s installment was the least eventful of the 3 days so far this week.  The bond market worked through its volatility before mortgage lenders set rates for the day and there hasn’t been much movement after that.  As such, the average lender was able to set rates right in line with yesterday and leave them there for the duration. In outright terms, the average top tier 30yr fixed rate is at 6.81%, which can mean most individual rate quotes are going out between 6.625% and 6.875% (for a best case scenario). 6.75% is a less common rate due to the structure of the underlying mortgage bond market (for reasons that are beyond the scope of this article, this basically means that by the time you’re moving down from 6.875, the next lower rate that makes sense to quote is 6.75%, with some limited exceptions). As always, no one should read much into the outright level of a mortgage rate index.  An individual scenario can vary significantly based on several factors.  Instead, focus on the day over day change.

In terms of line items, Wednesday morning is the week’s most active morning for economic reports. Several of them were potentially important, but the net effect has been muted so far.  In fact, MBS are perfectly unchanged despite an initial sell-off at 8:30am.  Long story short, GDP was a bit better than expected after accounting for the impact of a pre-tariff import surge, and the Q1 inflation data was also higher than expected. This sent bonds into weaker territory at first.  A flat Treasury refunding announcement helped, as did additional digestion of GDP internals (auto purchases had an outsized impact, and spending far outpaced income growth). The 10am monthly reading on PCE inflation showed that March was tame, but much like CPI/PPI 2 weeks ago, March inflation data is being discounted as not reflecting tariff impacts yet.

Wells Fargo’s economics team does an excellent job of getting timely charts out on mornings like this, so we’ll lean more heavily on those than normal, with a big hat tip.
The first chart shows the income vs spending discrepancy mentioned above.

From there, we’ll move to today’s GDP focal point, which was the biggest % drop in next exports in decades

The next two charts show the discrepancy between GDP (distorted by the import imbalance mentioned above) and final sales to domestic purchasers (not distorted).  Bottom line, GDP will get evening news coverage, but it was actually a relative non-event.