WTMS Blog Today = What’s up in Mortgage Today (AM) – 01/20/2026

Bonds are under pressure this morning as geopolitical tensions mount over Trump’s Greenland push. The 10-year Treasury yield jumped 47 basis points overnight to 4.273%, while MBS prices fell nearly 3/8ths of a point. Global bond markets are selling off sharply on concerns about potential NATO disruption and diplomatic fallout with Europe.

Mortgage rates hit resistance at the 6.0% level and climbed to weekly highs by Friday’s close. Freddie Mac reported the average 30-year fixed rate fell to 6.06% as of January 15, marking the lowest level in three years and nearly 100 basis points below last year. However, today’s bond weakness threatens to push rates higher again for originators.

Housing Market Pressures

Homebuilder sentiment declined in January according to the NAHB Housing Market Index, with affordability continuing to plague lower and mid-range market segments. Construction costs and elevated price-to-income ratios are making downpayments particularly challenging for buyers. The upper end of the housing market remains steady while affordability conditions take their toll elsewhere.

December existing home sales jumped 5.1% month-over-month but gained only 1.4% year-over-year, remaining near historic lows. Home prices are falling with the median price dropping for the second consecutive month and declining in five of the past six months. New home prices fell 3.3% monthly in October and are down 8.8% annually to their lowest levels since July 2021.

Policy Solutions Under Discussion

Industry experts suggest meaningful loan-level price adjustments for first-time homebuyers could address affordability without inflating the broader real estate market. Current Fannie Mae HomeReady LLPAs of $2,500 are too restrictive and small to create meaningful impact. A more substantial 2-3 point LLPA without income caps could meaningfully lower mortgage rates for first-time buyers while leaving the rest of the market untouched.

Kevin Warsh appears to have the inside track to succeed Jerome Powell as Federal Reserve Chairman, with Trump preferring to keep Kevin Hassett as National Economic Council director. Industrial production rose 0.4% monthly in December with year-over-year growth of 0.7%, though manufacturing output fell 0.7% annually.

Locking vs Floating

Mortgage rates clearly met resistance when attempting to break below 6.0% and pushed to weekly highs by Friday.

With Treasuries breaking their trading range and geopolitical risks elevated, risk aversion makes a stronger case today. The long weekend and position squaring may have contributed to recent weakness, but current volatility suggests caution for near-term closings.

Today’s Events

– ADP weekly jobs: 8k vs 11.25k previous

Bond Pricing

UMBS 30 yr
| Coupon | Price | Intra-Day Change |
| 5.0 | 99.87 | -0.17 |
| 5.5 | 101.23 | -0.09 |
| 6.0 | 102.3 | -0.04 |

GNMA 30 yr
| Coupon | Price | Intra-Day Change |
| 5.0 | 99.65 | -0.28 |
| 5.5 | 100.91 | -0.15 |
| 6.0 | 101.83 | -0.12 |

Treasuries
| Term | Yield | Price | Intra-Day Yield Change |
| 2 yr | 3.586 | 99.835 | -0.006 |
| 3 yr | 3.659 | 99.551 | 0.003 |
| 5 yr | 3.836 | 99.048 | 0.016 |
| 7 yr | 4.048 | 98.2 | 0.032 |
| 10 yr | 4.273 | 97.8 | 0.047 |
| 30 yr | 4.906 | 95.612 | 0.069 |