Higher mortgage rates will persist through 2026, affecting sales and refinancings. Those expectations led Fannie Mae to cut its volume outlook for the next two years.

Absence of Data Leaves Focus on Technicals and the Waiting Game

The extreme dearth of big ticket economic data was no mystery heading into the current week. Traders shouldn’t have been surprised and they are doing a great job of showing it. Bonds traded ruthlessly flat yesterday and only slightly less so today. In the bigger picture, yields look to have bounced at 4.57 but also to be holding mostly sideways as they await inspiration for the next big move. For those who must connect movement to events, we can’t disprove that traders erred on the side of selling ahead of today’s 20yr bond auction, and were then more willing to buy after the reasonably decent auction results. 

Market Movement Recap

11:03 AM sideways to slightly stronger overnight, but losing ground since 9am ET.  MBS down 2 ticks (.06) and 10yr up 2.4 bps at 4.602

01:23 PM 20yr auction was relatively strong, but isn’t helping much.  MBS down 3 ticks (.09) and 10yr up 2.5bps at 4.603

03:10 PM Recovering a bit in the hours after the auction.  MBS down 2 ticks (.06) and 10yr up 1.3bps at 4.591

Given that rates take cues from bonds and bonds take cues from economic data, it’s perhaps no surprise to see an absence of volatility in rates on a week that has very little to offer in terms of economic data. Still, mortgage rates usually manage to move a bit even when there are no compelling events to react to.  Why is this week different? Simply put, there are just some stretches of time that see very little bond market movement and, thus, very little rate movement.  This could be chalked up to coincidence, an absence of motivation, indecision regarding the impact of new policy announcements, the market’s desire to level off after a decent improvement last week, or a combination of all of the above. Whatever the justifications (or coincidences) may be, the average lender’s top tier 30yr fixed rate hasn’t budged so far this week.

A fake image of Brad Pitt was used to scam a woman out of $850,000. (Hopefully every lender has set up policies and procedures regarding events like the CFO receiving an email from the CEO asking to blindly wire money for a “secret acquisition.”) Remember when you could buy a great house for $850k? Although Los Angeles will be under great strain for years, in many areas you still can buy a house for that, but home builders are reporting a rise in cancellations due to increased mortgage rates, which surpassed 7 percent for the first time in seven months. While builder confidence in the market for newly built single-family homes improved slightly in January, concerns about inflation, tariffs on building materials, and government deficits persist. The National Association of Home Builders forecasts modest growth in housing starts for 2025, but the ongoing impact of high mortgage rates is leading some builders to cut home prices, with 30 percent offering average discounts of 5 percent. (Today’s podcast can be found here and this week’s is sponsored by Lender Toolkit’s new Prism. Experience a quantum leap in accuracy and efficiency as you streamline workflows, reduce errors, and close loans faster. Prism’s advanced OCR boasts 99 percent accuracy across 1,450+ document types. Effortlessly index, analyze, and underwrite crucial data with their intelligent system. Today’s has an interview with Lender Toolkit’s Joe Sorbello and VanDyk Mortgage’s Lindsey Kuhnle on how companies can properly onboard and implement new tech offerings.)

Bonds rallied yesterday, largely in an attempt to catch up with the movement that occurred on Monday when cash trading was closed (futures and other markets implied moderate gains). In the slightly bigger picture, the recent gains have had most to do with last week’s economic data and a small amount to do with Monday’s executive orders surrounding tariffs.  It continues to be the case that bonds would need to see a marked downturn in economic data or inflation for any big, near-term rally.  Without that, technicals and supply/demand have increased significance.  With today’s 20yr bond auction (small though it may be) and the resistance at 4.57% in 10yr Treasuries, it’s not too surprising to see some early selling.

The Consumer Financial Protection Bureau released a proposed version of the consent order on Jan. 17 and the company involved said it was finalized that day.

Trump’s pick for treasury secretary commits to a thorough and careful recapitalization and release process for Fannie Mae and Freddie Mac.

Matthew Ammon served as interim secretary between January and March 2021, ahead of the confirmation of now-retired head Marcia Fudge.

Toronto-Dominion Bank is looking to adjust its balance sheet to comply with a new cap imposed by U.S. regulators, part of a plea agreement reached last year for its role in failing to prevent money laundering.

Bright Financial denied the allegations that the company and its affiliates paid kickbacks to real estate brokers and agents in exchange for referrals.