WTMS Blog Today = What’s up in Mortgage Today (PM) – 02/20/2026
Mortgage markets close the week with a dramatic split narrative as economic data delivers both inflationary heat and economic cooling. Core PCE inflation surged to 3.0% annually versus the 2.9% forecast, marking the Fed’s preferred inflation gauge at uncomfortably hot levels. Meanwhile, Q4 GDP collapsed to just 1.4% growth compared to the street’s 3.0% expectation, creating a dangerous stagflation scenario that’s keeping bond traders on edge.
UMBS securities showed resilience despite the inflation surprise, with the 5.0 coupon gaining 3 basis points to finish at 100.31. The 6.0 coupon managed a modest 1 basis point gain, while the 5.5 coupon slipped just 1 basis point. This performance suggests mortgage investors are weighing slower growth against persistent inflation pressures.
Treasury markets painted a more concerning picture with yields climbing across the curve. The 10-year yield jumped 16 basis points to 4.087%, its biggest single-day move in weeks. The 30-year bond took the biggest hit, surging 23 basis points to 4.724% as long-term inflation expectations ratcheted higher.
Major Industry Developments
Veterans United Home Loans faces a federal class-action lawsuit alleging deceptive branding practices that mislead borrowers into believing the private lender is affiliated with the Department of Veterans Affairs. The Missouri federal court filing claims the company’s website design falsely suggests government ties, with real estate agents reporting they routinely lose business to Veterans United because borrowers think it’s “part of the VA.” The complaint notes that all three founders have no military service records, yet the company steers borrowers to costlier loans while distributing leads to “preferred” agents who pay roughly 35% commission upon closing. Rocket Companies remains under scrutiny as the industry watches a separate class-action lawsuit alleging illegal steering of homebuyers to the company’s in-house mortgage and title services.
These legal challenges highlight growing regulatory pressure on large mortgage lenders’ business practices and referral arrangements. Trump Administration officials sent Congressional representatives additional details on limiting institutional investment in single-family homes, with the plan now targeting institutions owning more than 100 homes rather than the expected 1,000-home threshold. The proposal includes exemptions for companies that build or rehabilitate homes for rent, potentially affecting major housing REITs like American Homes 4 Rent and Invitation Homes.
Since the legislation wouldn’t force current holdings to be sold, the primary impact may be encouraging more new construction as the only growth path for these institutional players. Rental Market Relief
Zillow’s latest forecast offers promising news for rental affordability as multifamily rents are expected to remain essentially flat through 2026, declining 0.2% by year-end. Single-family rents are projected to rise just 1.1% annually, a sharp slowdown from recent years as higher vacancy rates and new apartment supply improve renters’ bargaining power.
The typical U.S. asking rent sits at $1,895 in January, up only 2% year-over-year—the slowest growth since December 2020. Nearly 40% of rental listings now include concessions like free months or reduced deposits, keeping rent growth modest despite elevated demand.
For mortgage originators, this rental market stabilization could eventually translate into more favorable conditions for first-time homebuyers who are currently priced out of homeownership.
Locking vs Floating
The week ended with bond markets showing remarkable resilience despite conflicting economic signals, but next week’s lighter data calendar may not provide the same volatility buffers. With core inflation running above Fed targets while economic growth slows dramatically, rate movements could become unpredictable and swift.
Risk-averse clients should maintain lock positions given the potential for political developments to add unexpected volatility to an already uncertain interest rate environment.
Today’s Events
– Core PCE (m/m) (Dec): 0.4% vs 0.3% forecast
– Core PCE (y/y) (Dec): 3.0% vs 2.9% forecast
– GDP Q4: 1.4% vs 3.0% forecast
– PCE (y/y) (Dec): 2.9% vs 2.8% forecast
Bond Pricing
UMBS 30 yr
| Coupon | Price | Intra-Day Change |
| 5.0 | 100.31 | 0.03 |
| 5.5 | 101.54 | -0.01 |
| 6.0 | 102.53 | 0.01 |
GNMA 30 yr
| Coupon | Price | Intra-Day Change |
| 5.0 | 100.18 | 0 |
| 5.5 | 101.25 | 0.03 |
| 6.0 | 102.02 | 0.03 |
Treasuries
| Term | Yield | Price | Intra-Day Yield Change |
| 2 yr | 3.474 | 100.05 | 0.009 |
| 3 yr | 3.501 | 99.999 | 0.009 |
| 5 yr | 3.641 | 100.496 | 0 |
| 7 yr | 3.846 | 100.935 | 0.008 |
| 10 yr | 4.087 | 99.293 | 0.016 |
| 30 yr | 4.724 | 98.421 | 0.023 |
