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

Treasury markets are experiencing significant volatility today following President Trump’s controversial decision to order the removal of Federal Reserve Governor Lisa Cook. Short-term Treasury yields have fallen while long-term yields are rising, creating a mixed environment for mortgage-backed securities pricing. The 10-year Treasury bond is facing upward pressure as markets digest the political uncertainty surrounding Fed independence. Cook’s legal team has announced plans to sue over what they term an “illegal firing,” adding another layer of uncertainty to monetary policy expectations. This unprecedented move by the Trump administration is raising questions about Fed autonomy and could impact future interest rate decisions. Bond traders are closely monitoring developments as this situation unfolds throughout the trading session.

Mortgage rates have ticked up slightly today, with the 30-year fixed-rate mortgage showing modest increases according to multiple industry sources. The MBS Highway National Housing Index continues to show weakness, edging lower in August to a level of 24 after experiencing a massive drop in July. This persistent decline in the housing index reflects ongoing challenges in the mortgage origination market. The mortgage-backed securities market faces headwinds from both the political drama surrounding the Fed and broader economic uncertainty.

Lock-float considerations for mortgage originators have become increasingly complex given the volatile interest rate environment. Industry professionals are advising careful timing on rate locks as Treasury volatility continues to impact MBS pricing throughout the session. Despite potential Fed rate cuts on the horizon, several factors may slow the decline of mortgage rates in the near term. The ongoing political interference with Fed operations is creating risk premiums in longer-term bonds that directly impact mortgage pricing.

Market participants are keeping a close eye on how this unprecedented situation resolves and its implications for the broader fixed-income market. Subscribe to get this essential mortgage and bond market analysis delivered to your inbox daily, completely free.