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Mortgage Today (AM) - 08/26/26

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August 26, 2026

**WTMS Blog Today = What's up in Mortgage Today (AM) - 08/26/2026** PCE inflation data arrived slightly hotter than expected, triggering an immediate bond market selloff that pushed mortgage-backed securities down and the 10-year Treasury yield up 2.4 basis points to 4.65 percent. Headline PCE prices rose 0.2% monthly versus a 0.1% forecast, while core inflation came in exactly at expectations at 0.2% monthly and 3.3% annually. The market's negative reaction suggests traders had positioned for softer inflation, leaving little room for disappointment. UMBS 5.5 coupons slipped 0.17 points, and GNMA securities followed suit with comparable weakness. This morning's data reinforces the Fed's hawkish stance heading into September. Mortgage applications declined 1.0% last week as the 30-year fixed rate climbed to 6.78 percent—its highest level in three weeks. Refinancing activity dropped 2% week-over-week and 17% year-over-year, becoming the primary headwind on the application index. Purchase applications held relatively steady but remain 5% below year-ago levels, signaling that rising rates continue to pressure buyer demand. The roughly 20-basis point increase in mortgage rates over the past two months is beginning to squeeze the origination pipeline. Risk-averse loan officers should consider locking committed borrowers today. Durable goods orders jumped 1.1% in July, crushing economist expectations of 0.5% growth and signaling strength in equipment and machinery demand. Meanwhile, second-quarter gross domestic product confirmed at 1.5%, matching forecasts but marking a deceleration from 2.1% growth in the prior quarter. Personal spending rose 0.2% against a 0.1% estimate, while personal income surged 0.4% versus the 0.2% expectation. These mixed signals—strong orders balanced against moderating growth—create uncertainty for the Federal Reserve's next move. The Jackson Hole Symposium later this week may provide clarity on policy direction. New home sales collapsed 10.5% month-over-month in July to a 607,000 annualized pace, pushing inventory higher and stoking fears of price pressure ahead. Consumer confidence fell to its lowest level of 2026, even as the Case-Shiller home price index rose 2.1% year-over-year. The FHFA index, meanwhile, held flat, suggesting demand is cooling faster than valuations. This divergence points to an increasingly bifurcated housing market where some borrowers face affordability stress while others maintain equity cushions. Lenders focusing on recapture strategies through home equity lines and seconds are well-positioned for the current environment. Oil prices extended their weekly decline, falling 2.2% to $80.58 per barrel as Iran and Oman work toward a deal to resume shipping through the Strait of Hormuz. This easing of geopolitical risk has temporarily calmed inflation fears, though energy remains a wild card for Treasury markets. The week's $70 billion 5-year note auction closes today, and the results could signal whether demand for intermediate duration bonds is holding up. Crude oil inventories round out the afternoon calendar. Treasury buyback programs have provided support, but fundamental forces—deficits, issuance, and growth—continue pushing yields higher. Today's market action hinges on whether this morning's disappointment in PCE motivates additional selling or attracts value-hunting buyers near current levels. The 10-year yield must break below 4.62% to signal a genuine trend reversal; failure to do so keeps the ceiling intact. With Nvidia earnings looming after the close and the Fed symposium kicking off later this week, traders appear content to hold relatively flat positions. This uncertainty creates opportunities for disciplined originators to counsel risk-averse borrowers to lock. Market directional moves on war and fuel prices remain unpredictable. **Locking vs Floating** Today marks the first meaningful challenge to the uptrend since late July, with the potential to test bond market conviction. Risk-averse clients should use any intraday strength to lock in rates, while risk takers may wait for confirmation below the 4.62% yield floor before committing. The 20-basis point rise in mortgage rates over two months is already weighing on purchase demand, making immediate locks prudent for committed pipelines. **Today's Events** Core PCE (m/m) (Jul): 0.2% vs 0.2% forecast, 0.1% prior Core PCE (y/y) (Jul): 3.3% vs 3.3% forecast, 3.3% prior Durable Goods (Jul): 1.1% vs 0.5% forecast, 0.3% prior GDP Q2: 1.5% vs 1.5% forecast, 2.1% prior PCE (y/y) (Jul): 3.7% vs 3.6% forecast, 3.7% prior PCE Prices (m/m) (Jul): 0.2% vs 0.1% forecast, -0.1% prior **Bond Pricing** **UMBS 30 yr** | Coupon | Price | Intra-Day Change | | 5.0 | 97.07 | -0.27 | | 5.5 | 99.45 | -0.22 | | 6.0 | 101.47 | -0.15 | **GNMA 30 yr** | Coupon | Price | Intra-Day Change | | 5.0 | 97.39 | -0.26 | | 5.5 | 99.73 | -0.13 | | 6.0 | 101.53 | -0.15 | **Treasuries** | Term | Yield | Price | Intra-Day Yield Change | | 2 yr | 4.224 | 99.812 | 0.050 | | 3 yr | 4.285 | 99.903 | 0.044 | | 5 yr | 4.382 | 99.969 | 0.053 | | 7 yr | 4.505 | 99.226 | 0.042 | | 10 yr | 4.663 | 99.696 | 0.034 | | 30 yr | 5.186 | 99.080 | 0.019 |

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Mortgage Today (PM) - 08/25/26

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August 25, 2026

**WTMS Blog Today = What's up in Mortgage Today (PM) - 08/25/2026** Bond markets rallied sharply today on hopes of a peace deal in the Iran conflict, with mortgage-backed securities and Treasury yields both posting significant gains. The 10-year yield dropped 6.5 basis points to 4.632% by day's end, while UMBS 5.5 coupons climbed 42 basis points to 99.69. Oil prices fell alongside bond yields, a sign that geopolitical tension eased enough to ease inflation concerns. However, analysts warn this volatility remains driven primarily by war headlines and fuel costs rather than fundamental economic shifts. The rally should not overshadow the uncertainty ahead for mortgage originators. Home price data released today showed mixed signals that could shape lock-and-float decisions going forward. The Case-Shiller 20-city index climbed 2.1% year-over-year, topping forecasts of 1.7%, while monthly momentum slowed to just 0.4%. FHFA home prices rose 2.3% annually but showed zero monthly change, disappointing the 0.2% monthly gain investors expected. These data suggest that while housing markets remain sticky on an annual basis, near-term price pressures are cooling. For mortgage sellers, slower price growth could translate to reduced equity accessibility and softer purchase demand in coming months. Secretary Bessent's Treasury bond buyback plan continues to provide a "put" under longer-dated Treasuries, compressing swap spreads to their tightest since February. The 30-year swap spread narrowed to record lows as traders recognize the government now has a permanent buyer at the long end of the curve. Benchmark Treasury yields have drifted lower despite the plan's initial controversy, suggesting markets are crediting the intervention with some effectiveness. Positioning data shows bullish tilts in long-bond options, with call volume surging relative to puts on long-maturity Treasury futures. This dynamic means any rally could attract fresh selling, but any sell-off may encounter institutional support. A federal court ruled that a RESPA referral case against Veterans United Home Loans can proceed to discovery, putting referral compensation models industry-wide on notice. The judge declined to grant the lender's motion to dismiss the core claim that a 35% real estate commission split improperly rewarded agents for keeping borrowers with Veterans United. While the ruling is not a finding of guilt, it signals that courts will scrutinize whether compensation paid for legitimate services or for steering borrowers. This case means mortgage originators must review their own referral arrangements with real estate partners, title companies, and appraisers to ensure they satisfy RESPA's brokerage safe harbor. Ambiguity between referral fees and kickbacks remains a significant compliance risk industry-wide. GNMA securities outperformed UMBS slightly on the day, with the 6.0 coupon up 25 basis points to 101.68 versus UMBS 6.0 up 30 basis points to 101.62. Lower coupons showed similar relative strength, with GNMA 5.0 gaining 52 basis points compared to UMBS 5.0 up 47 basis points. The narrowing differential reflects typical patterns when risk-off sentiment drives flight-to-quality demand. Two-year Treasuries fell 5.8 basis points to 4.172%, while the 30-year dropped 7.0 basis points to 5.156%, indicating a modest flattening across the curve. These moves support the view that today's rally was driven by geopolitical relief rather than economic weakness expectations. **Locking vs Floating** Market technicians identified today as the first meaningful test of the prevailing downtrend that began in late July, with the 4.62% level serving as a key pivot point. Risk-takers typically monitor such moments for evidence of follow-through; a break below 4.62% would signal stronger conviction in the rally. Risk-averse borrowers should treat days like this as tactical opportunities to lock, securing rates before momentum potentially reverses. However, both lock and float decisions remain heavily dependent on daily headlines involving military conflict and oil prices rather than economic fundamentals. Support and resistance levels in the 10-year sit at 4.54%, 4.42%, 4.71%, and 4.80%, providing markers for technical traders. **Today's Events** Case Shiller Home Prices-20 y/y (Jun): 2.1% vs 1.7% forecast, 1.6% previous CaseShiller 20 mm nsa (Jun): 0.4% vs forecast not provided, 0.9% previous FHFA Home Price Index m/m (Jun): 0.0% vs 0.2% forecast, 0.3% previous FHFA Home Prices y/y (Jun): 2.3% vs forecast not provided, 2.2% previous **Bond Pricing** **UMBS 30 yr** | Coupon | Price | Intra-Day Change | **GNMA 30 yr** | Coupon | Price | Intra-Day Change | **Treasuries** | Term | Yield | Price | Intra-Day Yield Change | | 2 yr | 4.178 | 100.136 | -0.058 | | 3 yr | 4.241 | 100.025 | -0.062 | | 5 yr | 4.332 | 100.193 | -0.072 | | 7 yr | 4.463 | 99.475 | -0.072 | | 10 yr | 4.630 | 99.963 | -0.068 | | 30 yr | 5.167 | 99.369 | -0.058 | Market Data

Mortgage Today (AM) - 08/25/26

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August 25, 2026

**WTMS Blog Today = What's up in Mortgage Today (AM) - 08/25/2026** MBS securities strengthened modestly Tuesday morning with UMBS 5.5 pricing at 99.47, up 0.20 from the previous close, while GNMA 5.5 held at 99.69, both tracking the softer Treasury backdrop. Oil prices dropped below $90 per barrel, providing relief to bond markets as diplomatic signals from the U.S. eased geopolitical tension concerns. The 10-year Treasury yield declined 3.1 basis points to 4.66%, contributing to the modest upward pressure in agency mortgage-backed securities. Longer-dated maturities outperformed shorter durations, suggesting the market is pricing in some yield relief despite persistent deficit pressures. These intraday moves remain constrained within a narrow range, reflecting the uncertainty surrounding Fed policy and economic fundamentals. Originators face continued bifurcation in the housing market, where monthly payment affordability—not down payment size—now determines whether borrowers can compete for ownership. Homeowners sitting on near-record equity levels remain reluctant to access it at rates pushing 7%, forcing lenders to focus on high-equity-position borrowers and innovative financing solutions. Millennials are adapting through smaller homes, lower-cost metros, and shared-equity structures rather than waiting for rates to fall. This structural shift means originators must recalibrate their underwriting to emphasize cash flow sustainability and non-traditional income sources. Home equity lines of credit have emerged as the immediate volume driver, with smart lenders cutting closings from 45 days to 15 days through technology and streamlined processing. The employment picture remains resilient with private payrolls averaging 11,750 per week through August 8, though traders are waiting for clarity on whether the Fed will tighten further in September. Federal Reserve Chair Kevin Warsh is set to deliver his first major speech this week, signaling potential shifts in communication style and monetary policy messaging. Technology earnings, particularly Nvidia, will weigh heavily on risk sentiment heading into September. Corporate bond issuance continues to exert upward pressure on long-end yields despite Treasury buyback programs. The treasury market faces sustained pressure from widening deficits and a structural shift toward leveraged private investors replacing central banks as buyers. Case Shiller home prices posted a 2.1% year-over-year gain in June, beating expectations of 1.7% and up from 1.6% previously, signaling continued but moderating home price momentum. Month-over-month, the index rose just 0.4% versus forecast of flat readings, reflecting slower sequential appreciation. FHFA's housing price index showed a flat monthly reading in June, missing expectations of a 0.2% gain, while year-over-year growth ticked up to 2.3% from 2.2%. These mixed signals suggest home prices are stabilizing but not accelerating, reducing refinance urgency and keeping purchase activity dependent on employment stability. Lock-float considerations remain elevated given geopolitical uncertainty and commodity volatility, favoring a defensive posture until clearer momentum emerges. **Locking vs Floating** Lock-float risk remains elevated as each day brings new uncertainty around global conflict escalation and fuel price trajectories, combined with ongoing corporate bond issuance pressuring yields higher. Until a confirmed downtrend and clear support level emerges, lenders should maintain a defensive stance rather than chase short-term pockets of opportunity. Momentum indicators have yet to show a sustainable shift that would justify abandoning caution. **Today's Events** Case Shiller Home Prices-20 y/y (Jun): 2.1% vs 1.7% forecast, 1.6% previous CaseShiller 20 mm nsa (Jun): 0.4% vs forecast unavailable, 0.9% previous FHFA Home Price Index m/m (Jun): 0.0% vs 0.2% forecast, 0.3% previous FHFA Home Prices y/y (Jun): 2.3% vs forecast unavailable, 2.2% previous July New Home Sales, August Consumer Confidence, $69 billion 2-year Treasury auction, and remarks from Richmond Fed President Barkin are also expected. **Bond Pricing** **UMBS 30 yr** | Coupon | Price | Intra-Day Change | | 5.0 | 97.12 | 0.24 | | 5.5 | 99.46 | 0.19 | | 6.0 | 101.47 | 0.14 | **GNMA 30 yr** | Coupon | Price | Intra-Day Change | | 5.0 | 97.42 | 0.27 | | 5.5 | 99.69 | 0.22 | | 6.0 | 101.49 | 0.05 | **Treasuries** | Term | Yield | Price | Intra-Day Yield Change | | 2 yr | 4.204 | 100.088 | -0.019 | | 3 yr | 4.268 | 99.95 | -0.033 | | 5 yr | 4.364 | 100.049 | -0.040 | | 7 yr | 4.496 | 99.282 | -0.039 | | 10 yr | 4.66 | 99.72 | -0.036 | | 30 yr | 5.194 | 98.963 | -0.033 |

WTMS Video Summary

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