WTMS Blog Today = What’s up in Mortgage Today (AM) – 08/26/2025

Mortgage-backed securities are experiencing volatility today as political tensions surrounding the Federal Reserve intensify. President Trump’s order to remove Fed Governor Lisa Cook has created uncertainty in the bond markets, with longer-dated Treasuries tumbling while shorter-term yields have fallen. This Fed shake-up is sending mixed signals through the mortgage market as investors reassess monetary policy direction. The 10-year Treasury yield is seeing upward pressure amid concerns about potential changes in Fed leadership and policy. MBS pricing is reacting negatively to this Treasury movement, as the correlation between these markets remains strong.

Current UMBS securities are showing price weakness, with red arrows indicating declining values on most mortgage bond benchmarks. Recent data from MBS Highway shows their National Housing Index slipped by 2 points in August after experiencing a massive drop in July. This continued weakness reflects ongoing challenges in the mortgage origination business as higher rates persist. The mortgage market is struggling with reduced refinancing activity and slower purchase money lending. Interest rate volatility is particularly impacting the mortgage pipeline, with originators facing margin pressure and extended lock periods.

GNMA securities are following similar patterns to conventional MBS, though government-backed bonds maintain slightly better liquidity. The uncertainty around Fed policy is making pricing more difficult for lenders trying to manage their hedging strategies. Subscribe to get this critical mortgage market intelligence delivered to your inbox daily, completely free.