Total mortgage origination volume is forecasted to barely eclipse $2 trillion by the end of the year for the first time since 2022, iEmergent said.

Federal Reserve Gov. Michael Barr said in a speech Thursday that he fears the gradual pace of price increases from tariffs being passed on to consumers may prolong the one-time inflationary effect of the tariffs to the point where it affects consumers’ inflation expectations.

Uneventful Day; MBS Underperform

It’s not uncommon to see MBS outperform their Treasury benchmarks in the run up to a round of weekly Treasury auctions only to underperform when the auction cycle wraps up. That underperformance (or rather, Treasury outperformance) was on full display today with MBS losing about a quarter point while 5yr notes lost about half as much. While bonds are slightly closer to the weaker end of the recent range, they’re still very much inside it.

Market Movement Recap

09:25 AM Moderately weaker so far with 5.0 coupons down 6 ticks (.19) and 10yr yields up 2.6bps at 4.143

11:45 AM flat since last update.  MBS down 6 ticks (.19) and 10yr up 1.9bps at 4.136

01:04 PM Slightly weaker bond auction = slightly weaker response.  MBS down 7 ticks (.22) and 10yr up 2.9bps at 4.146

Equifax will hold costs for scores from FICO rival Vantagescore through 2027 and offer other incentives meant to drive adoption of the alternative metric.

Top Democratic lawmakers are asking the full appeals court to hear a case about the Trump administration’s efforts to fire employees at the Consumer Financial Protection Bureau.

Federal Reserve Gov. Michael Barr is warning small banks about the growing threat from fraudsters’ use of AI-generated deepfakes. But he also says AI may be able to help community banks fight fraud more effectively.

New Federal Reserve research reveals that identity theft victims who use extended fraud alerts often see significant and lasting credit improvements.

The truth is straightforward: the VantageScore 4.0 credit score outperforms the outdated FICO Classic credit score for mortgage, writes the chief data scientist at VantageScore.

Mortgage rates technically ticked a hair lower today, but it’s more accurate to view them as being broadly sideways. Some lenders issued improvements yesterday afternoon.  Those lenders were closer to unchanged this morning.   As of this afternoon, several lenders have already issued slight rate increases due to weakness in the bond market.   Bonds dictate rates. Today, bonds took cues from two main events in the afternoon.  The first was a scheduled auction of 10yr Treasuries. Auction demand was slightly weaker than expected. This pushes Treasury yields higher and Treasury yields correlate with mortgage rates.  An hour later, the Fed released the minutes from the last Fed meeting 3 weeks ago. The minutes painted a slightly less rate-friendly picture than was in place at the time. This created a bit of extra weakness in the bond market, but only by a barely detectable amount. All told, the bonds that specifically pertain to mortgage rates were right at the same levels seen during the same time frame yesterday afternoon.  In general, that will equate to mortgage rates being at the same levels as well.

Some Selling Pressure After Auction and Fed Minutes

There were no market-moving economic reports scheduled for today regardless of the government shutdown. That left the focus entirely on the afternoon events: the 1pm 10yr Treasury auction and the 2pm release of the Fed Minutes (a more detailed account of the Fed meeting 3 weeks ago). The auction was slightly weaker than expected, which accounted for most of the upward pressure in yields in the afternoon. The minutes didn’t help (even if they didn’t necessarily hurt). Notable comments included mention of a few members who would have been OK with no rate cut and a majority of members remaining concerned about inflation. 

Market Movement Recap

09:27 AM modestly stronger overnight and holding so far.  MBS up 2 ticks (.06) and 10yr down 2.4bps at 4.103

12:01 PM Near weaker levels.  MBS up 1 tick (.03) and 10yr down 0.9bps at 4.118

01:03 PM No major reaction to middle-of-the-road auction.  10yr down 1bp at 4.117 and MBS up 1 tick (.03)

01:59 PM MBS are 1 tick lower (.03) and 10yr yields are 0.4bps higher at 4.131

02:40 PM Slight additional selling after Fed Minutes.  MBS down 3 ticks (.09) and 10yr up 0.6bps at 4.133