The first 3 days of this week have all generally seen yields at the highest levels in a month (or perhaps in “at least 28 days” considering Feb’s day count). While that doesn’t sound like an overly pleasant turn of events for the bond/mortgage market, the reality is far less threatening, for now.  It is true that if today’s session closes at present levels, they will be the weakest since Feb 24th, but it’s also true that those levels aren’t too far from recent lows.  The modal range floor is 4.19% in 10yr yields. We’re just under 4.36% this morning–just gently testing the 4.34% range ceiling. Some technicians would argue that the opening gap from Feb 25th still needs to be filled before we find out what’s next.

Anyone who thinks politics doesn’t impact residential lending isn’t, frankly, paying attention. Let’s start with something simple, like… interest rates. Rates, including mortgage rates, are influenced by economic activity, and we can all agree that tariffs figure into that. We’ve all heard the case in favor of tariffs over the last year. But Republicans are well aware of Ronald Regan’s thoughts on tariffs. Economists Paul Krugman and Milton Friedman had their thoughts on tariffs. Let’s hope that the Trump Administration is right! How about Freddie Mac and Fannie Mae? Informal chatter among us capital markets folks have a rise in Agency conversations about buybacks, possibly because of Agency uncertainty or because of them wanting to be “first in line” if things become rough. But wait… there’s more! Yesterday Bill Pulte (the Director of the FHFA, conservator of F&F) posted on X (yes, owned by Elon Musk) that Freddie and Fannie would terminate any SPCPs (Special Purpose Credit Program… think, helping economically disadvantaged groups; more below). But wait… there’s more: see below. (Today’s podcast can be found here and this week’s is sponsored by ICE. ICE offers an interconnected digital mortgage ecosystem to help clients improve productivity, reduce costs, and deliver a meaningful customer experience. Today’s has an interview with Servbank’s JoAnne Gonzalez on how servicers invest in technology and people to drive the best outcomes and results.) Correspondent and Wholesale Loan Programs

The Federal Housing Finance Agency’s withdrawal of tenant requirements and an unfair and deceptive acts and practices bulletin sets the tone for the future.

Learn how bridge loans and hard money loans work, their pros and cons, and discover which option suits your needs.

Pent-up demand and the rapid pace of home appreciation is fueling the ongoing rise in home prices, even as mortgage rates present obstacles for buyers.

HUD and DHS entered into an agreement which would place a HUD staffer inside Homeland Security and make referrals for immigration enforcement.

Wall Street veteran Frank Bisignano pledged at a Senate Finance Committee hearing that he doesn’t plan to privatize Social Security.

Overnight Weakness Gives Way to Modest Gains

In absolute terms, it was a moderately active day for bonds as 10yr yields moved inside a respectable 7bp range (4.37 to 4.30). In day-over-day terms, we’re left with merely modest gains, but no one’s complaining. Early trading raised concerns about a technical break above the 4.34 ceiling. As we discussed yesterday, such breakouts can just as often serve as cues for buyers to get back in the pool, and that appears to have been the case today. Stocks had one of their calmest sessions in recent memory and bonds didn’t exhibit any of the typical correlation.  U.S. bond traders simply showed up in line to buy some bonds, and that was that.

Econ Data / Events

Consumer Confidence 

92.9 vs 94.0 f’cast, 98.3 prev
lowest reading since July 2022
expectations index 65.2 vs 72.9 prev

Market Movement Recap

09:42 AM Weaker overnight, but stronger after 8:20am CME Open.  10yr down half a bp at 4.337 and MBS up 1 tick (.03)

12:51 PM Bond rally continues.  MBS up an eighth and 10yr down 4.2bps at 4.3

03:49 PM Off the best levels, but still stronger.  MBS up 2 ticks (.06) and 10yr down 3bps at 4.312

Bonds came into the domestic session in weaker territory after steady selling in Europe.  The resulting yields were ultimately a few bps higher than the nearest technical ceiling in the 10yr (4.34), which is also the lower boundary of a “gap” created by the big overnight rally on February 25th. Technicians could view this movement two ways. On one hand, a break above the technical ceiling could cause concern about additional selling.  Conversely, a move back into a gap could be viewed as a cue to buy again. Interestingly enough, bonds began rallying right at the official start of the domestic session.  Is this enough to conclude that the “fill the gap” crowd is in charge?  Probably not. In a sideways range, the typical pattern involves 1-3 days of gains followed by 1-3 days of weakness.  This is still a generally sideways market that’s waiting for more serious motivation.

This week I head to San Diego for MCT Exchange 2025, and my email has been heating up. “Rob, are you hearing about a big jump in lock volume last week?” Yes… it may not be just you. As they say, a rising tide raises all boats. “Rob, are you hearing about an uptick in FHA delinquencies?” Yes, absolutely, and for quite some time. These high margin, low down payment loans are seeing an increase in problems. “Rob, are you hearing that the CFPB is back up and running?” Yes, at least parts of it: regs, monitoring, the complaint function; less so supervision and enforcement. Speaking of which, Mortgage Musings author and attorney Brian Levy hopes someone gets his message in a bottle with his latest Musing doubling as an open letter to CFPB leadership containing many suggestions for mortgage regulatory reform. “Rob, are you hearing that LOs need videos to reach millennial home buyers?” Perhaps… I know that in today’s Mortgages for Millennials, Kristin Messerli and Robbie Chrisman are joined by guest Ralph Remy of National MI: “Trust in financial institutions is plummeting, and YouTube has emerged as the go-to platform for homebuying education.” (Today’s podcast can be found here and this week’s is sponsored by ICE. ICE offers an interconnected digital mortgage ecosystem to help clients improve productivity, reduce costs, and deliver a meaningful customer experience. Today’s has an Interview with TRUE’s Steve Butler on how instant loan intelligence is revolutionizing borrower engagement. Lenders who fail to adopt AI-driven processes risk becoming obsolete.)