WTMS Blog Today = What’s up in Mortgage Today (AM) – 05/11/2026

The 10-year Treasury yield jumped 3.2 basis points to 4.39% as crude oil climbed past $97 per barrel on Middle East tensions and failed peace negotiations between the United States and Iran. Traders have now priced in more than a 40% probability that the Federal Reserve under incoming Chair Kevin Warsh will need to raise interest rates next year, a dramatic shift from earlier expectations of rate cuts. Tuesday’s Consumer Price Index report for April is critical to watch—economists forecast headline inflation of 3.7% year-over-year, the highest level since 2023, with core inflation at 2.7%.

Veterans United faces mounting legal pressure as an amended complaint grew from 3 plaintiffs to 15, expanding allegations to include bait-and-switch tactics where borrowers were allegedly quoted artificially favorable rates during shopping but faced higher costs at lock. The complaint now includes RESPA violations and consumer protection claims across five states, supported by testimony from six confidential loan officers and veterans. Veterans United characterized the lawsuit as “volume and hyperbole, not substance.”

Pending home sales surged 7.7% year-over-year in the four weeks ending May 3 as rates briefly retreated and inventory expanded to its highest level in five years, though homes are selling slower than historical spring norms.

The typical property now takes 43 days to go under contract—three days longer than last year—and only 26.4% of homes sold above asking price, marking the lowest spring share in at least five years. Recent rate increases driven by Middle East geopolitical risks could dampen this emerging momentum. CrossCountry Mortgage matched UWM’s $12-per-share bid for Two Harbors Mortgage in all cash, arguing that certainty trumps UWM’s stock-based offer which was worth roughly $7.88 per share at the time of announcement.

Two Harbors’ board unanimously reaffirmed support for CrossCountry, and the shareholder vote remains scheduled for May 19 with the deal expected to close in Q3 2026. This cash certainty highlights growing apprehension among mortgage industry participants about stock-based acquisition deals. The FTC issued a warning letter to Mortgage Connect for enforcing blanket noncompete agreements with all employees regardless of role or responsibility.

The agency questioned whether narrower tools like nondisclosure and nonsolicitation agreements could address the company’s stated concerns about protecting confidential information and goodwill. Industry feedback to the FTC repeatedly described noncompetes as “a huge problem” that effectively hold loan officers and branch managers “hostage year after year.”

UMBS 30-year securities weakened across the board with 5.0 coupons down 36 basis points, 5.5 coupons down 24 basis points, and 6.0 coupons down 17 basis points as rates moved higher. GNMA pricing showed more resilience with only modest declines in the 5.5 and 6.0 coupons, reflecting stronger investor demand for government-backed mortgage-backed securities.

Rate sensitivity continues to dominate mortgage-backed security pricing as geopolitical risk keeps Treasury yields elevated.

**Locking vs Floating**

Bond yields remain locked in a narrow range near 4.34% until geopolitical risks clarify and the Middle East conflict resolves, making it nearly impossible to deploy a meaningful lock-or-float strategy based on daily war headlines. Rate traders recommend focusing on intraday MBS price swings rather than attempting directional bets on longer-term yields.

A successful peace deal could provide modest rate relief compared to current levels, whereas escalation would likely push yields higher.

**Today’s Events**

May 11: Existing home sales

May 12: NFIB small business optimism; ADP employment report; Consumer Price Index; Federal budget

May 13: MBA mortgage applications; Producer Price Index

May 14: Initial jobless claims; retail sales; import price index; business inventories

May 15: Empire manufacturing; industrial production

**Bond Pricing**

**UMBS 30 yr**
| Coupon | Price | Intra-Day Change |
| 5.0 | 98.54 | -0.36 |
| 5.5 | 100.57 | -0.24 |
| 6.0 | 102.09 | -0.17 |

**GNMA 30 yr**
| Coupon | Price | Intra-Day Change |
| 5.0 | 99.42 | -0.09 |
| 5.5 | 100.87 | -0.03 |
| 6.0 | 101.82 | -0.15 |

**Treasuries**
| Term | Yield | Price | Intra-Day Yield Change |