WTMS Blog Today = What’s up in Mortgage Today (PM) – 02/11/2026

Bond markets displayed stunning resilience today despite stronger-than-expected employment data that typically sends yields soaring. The UMBS 5.5 coupon gained 4 basis points to 101.36 while the 6.0 coupon held steady at 102.42. January payrolls crushed forecasts with 130,000 new jobs versus the 70,000 expected, yet mortgage-backed securities showed impressive stability throughout the session.

The unemployment rate dropped to 4.3% from December’s 4.4%, beating expectations, while average hourly earnings jumped 0.4% monthly versus the 0.3% forecast. Labor force participation climbed to 62.5%, suggesting more Americans are actively job hunting. These robust employment numbers normally trigger significant bond selling, but today’s response was remarkably muted.

Treasury yields rose modestly across the curve, with the 10-year note climbing just 30 basis points to 4.173%. The 2-year yield saw the largest increase at 66 basis points to 3.52%, reflecting market expectations for potential Federal Reserve policy adjustments. Short-term rates remain more sensitive to employment data than longer-term bonds.

Housing Market Challenges Emerge

The Housing for the 21st Century Act gained momentum with bipartisan House Financial Services Committee approval, targeting the nation’s housing shortage through reduced red tape and updated FHA loan limits. Led by Chair French Hill and Ranking Member Maxine Waters, the legislation aims to speed construction while expanding financing options for manufactured homes and small mortgages. The Mortgage Bankers Association endorsed the bill, which aligns with similar Senate efforts to remove homebuilding barriers.

Meanwhile, home price declines accelerated in key markets during December, with national year-over-year growth slowing to just 0.9%. Florida, Texas, Colorado, Hawaii, and Arizona led states experiencing the steepest price corrections. Metro areas like Kahului-Wailuku, Victoria, and Wichita Falls topped the list of markets seeing outright price declines.

Fannie Mae’s Financial Strength

Fannie Mae’s fourth-quarter earnings of $3.5 billion highlight the government-sponsored enterprise’s continued profitability streak. The company earned over $14 billion in 2025, marking 14 consecutive years of annual profits. Net worth reached $109.0 billion by year-end, up $95.5 billion since 2020, raising questions about the urgency of GSE reform given such strong financial performance.

Mortgage Servicing Challenges

Negative equity concerns are mounting in FHA and VA portfolios, affecting roughly 1.1 million borrowers—the highest level since early 2018. Texas and Florida markets face particular stress from rapid development and localized price shifts. While borrowers today are less likely to walk away than during the Great Financial Crisis, rising negative equity still influences decision-making and repayment behavior.

FHA portfolios show the most stress as borrowers face economic friction from higher living costs and resumed student loan payments. Many delinquent files now reflect structural income problems rather than temporary hardships, limiting traditional loss mitigation effectiveness. Borrowers increasingly use AI tools to contest servicing actions and pursue every available relief option, elevating operational costs and compliance requirements.

Locking vs Floating

Bond markets showed surprising resilience despite the strong jobs report, with only modest selling pressure throughout the session. However, lopsided employment reports tend to establish momentum patterns that persist through subsequent trading days. Floating carries above-average risk given this dynamic, especially with Friday’s Consumer Price Index data serving as the next major market catalyst.

Today’s Events

– Average earnings mm (Jan): 0.4% vs 0.3% f’cast, 0.3% prev
– Non Farm Payrolls (Jan): 130K vs 70K f’cast, 50K prev
– Participation Rate (Jan): 62.5% vs — f’cast, 62.4% prev
– Unemployment rate mm (Jan): 4.3% vs 4.4% f’cast, 4.4% prev

Bond Pricing

UMBS 30 yr
| Coupon | Price | Intra-Day Change |
| 5.0 | 99.97 | 0 |
| 5.5 | 101.36 | 0.04 |
| 6.0 | 102.42 | 0.01 |

GNMA 30 yr
| Coupon | Price | Intra-Day Change |
| 5.0 | 100.15 | -0.06 |
| 5.5 | 101.22 | -0.02 |
| 6.0 | 102.25 | 0 |

Treasuries
| Term | Yield | Price | Intra-Day Yield Change |
| 2 yr | 3.52 | 99.961 | 0.066 |
| 3 yr | 3.574 | 99.793 | 0.059 |
| 5 yr | 3.743 | 100.033 | 0.043 |
| 7 yr | 3.951 | 100.3 | 0.037 |
| 10 yr | 4.173 | 98.598 | 0.03 |
| 30 yr | 4.807 | 97.129 | 0.02 |