The government securitization guarantor could move forward with more big-picture initiatives as well this year now that it officially has a confirmed president.

A handful of former Fed officials noted that the markets’ measured response to a probe into Fed Chair Jerome Powell was a result of pushback from Trump allies.

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Mortgage applications for new-home purchases decreased 15.2% on a seasonally adjusted basis in December, according to the Mortgage Bankers Association.

While rumors swirl that Jerome Powell is paying his own legal bills while dealing with the DOJ, and the Administration is ruminating on using 401(k) or 529 funds to buy a home, in the land of “concrete news” the office-to-apartment and condo conversion trend is accelerating, with the number of units repurposed from office buildings more than tripling since 2022 and the conversion pipeline expanding by 28 percent between 2024 and 2025. Do you have the loan products for them? The total pipeline has now reached 70,700 units, with major metros like New York (8,310 units), Washington, D.C. (6,533 units), and Los Angeles (4,388 units) leading the way. Notably, office-to-apartment projects account for large shares of projects in places like Omaha (85 percent), Dallas (79 percent), and Minneapolis (78 percent). There is a growing shift toward repurposing newer office spaces built between the 1990s and 2010s. Office conversions now make up 42 percent of all future adaptive reuse apartments, up from 38 percent in 2024, and nearly 15 percent of office buildings nationwide are deemed viable for transformation. (Today’s podcast can be found here and this week’s are sponsored by Figure. Take advantage of Figure’s technology and products like its fixed HELOC, DSCR loan, piggyback loan, and direct debt paydown, helping you serve more of your existing network and expand into new markets. Hear an interview with Worthy Performance Group’s Laura Lasher on why many lenders will fail to capitalize on a rate-driven rebound, what truly differentiates winning loan officers, how competitive dynamics have shifted toward larger institutions, which training investments genuinely improve performance, and the warning signs that signal an organization is unprepared for the next market cycle.)

Mortgage rates moved modestly lower for the average lender today, but higher for others. The distinction is whether the lender in question made a late-day adjustment yesterday afternoon.  At the time, the underlying market for mortgage bonds was improving somewhat sharply. This prompted several lenders to drop rates before the end of business. Those lenders had to bump rates back up this morning as the bond market was in weaker territory this morning.  Other lenders–those who didn’t make any changes yesterday afternoon–were able to nudge rates modestly lower today as this morning’s bond market levels were a bit better than yesterday morning’s.  In the bigger picture, the average lender is still very close to 3-year lows. [thirtyyearmortgagerates]

Data-Driven Weakness

It was a reasonably straightforward day for the bond market. Trading was flat overnight, then weaker after the 8:30am Jobless Claims data.  That report is hit and miss as a market mover, but a sub-200k print without any recent seasonal spike is certainly worth a few bps of weakness. Impacts were most notable in Fed Funds Rate expectations, which have now fully eliminated any possibility for a January cut and lowered the probability of a March cut from over 40% last week to under 20% today. In the bigger picture, longer-term rates remain squarely range-bound and MBS remain broken out the top of their comparable range thanks to GSE purchases.

Econ Data / Events

Continued Claims (Jan)/03

1,884K vs 1890K f’cast, 1914K prev

Jobless Claims (Jan)/10

198K vs 215K f’cast, 208K prev

NY Fed Manufacturing (Jan)

7.70 vs 1 f’cast, -3.90 prev

Philly Fed Business Index (Jan)

12.6 vs -2 f’cast, -10.2 prev

Market Movement Recap

08:31 AM First move is weaker after lower jobless claims. MBS down an eighth and 10yr up 2.5bps at 4.157

10:50 AM Lows of the day after rebounding into the 9:30am hour. MBS down 6 ticks (.19) and 10yr up 2.6bps at 4.159

01:48 PM MBS down 6 ticks (.19) and 10yr up 2.1bps at 4.153

03:15 PM Weakest levels for Treasuries with 10yr up 3.2bps at 4.164.  MBS still down 6 ticks (.19).

The weekly jobless claims data (not to be confused with the big monthly jobs report) is hit and miss when it comes to its propensity to move the bond market. On occasions where the results fall far from the forecast, we tend to see moderate reactions. Odds increase when the headline breaks under the psychological level of 200k.  With that, today’s 198k print is having a bit of a negative impact on bonds at 8:30am, taking the market from roughly unchanged overnight levels into slightly weaker territory. A stronger Philly Fed index offered no solace.

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