WTMS Blog Today = What’s up in Mortgage Today (AM) – 08/29/2025

Mortgage backed securities showed mixed signals today as the 10-year Treasury yield climbed to 4.24%, representing a 3 basis point increase from yesterday’s session. This uptick in Treasury yields typically pressures mortgage rates higher, though the mortgage backed securities market demonstrated some resilience. The UMBS market faced headwinds from the Treasury movement, while GNMA securities held relatively steady in early trading. Despite the Treasury pressure, 30-year fixed mortgage rates actually dropped to 6.54% according to multiple industry sources. This disconnect between Treasury yields and mortgage rates suggests that mortgage backed securities pricing improved enough to offset the Treasury impact. The improvement in MBS pricing likely stems from continued investor appetite for mortgage paper amid concerns about housing market liquidity.

The MBS Highway National Housing Index continues to reflect market stress, edging lower by 2 points to a level of 24 in August after July’s significant decline. This index reading indicates continued challenges in the mortgage origination pipeline, with lenders facing margin pressure and reduced volume. Barry Habib’s latest commentary suggests that while rates may have found a temporary floor, the broader housing market slowdown remains a concern for mortgage backed securities investors. Market participants are closely watching Federal Reserve policy signals, as any shift in monetary policy could dramatically impact both Treasury yields and mortgage backed securities performance.

The recent housing market data showing continued softness has created uncertainty about future mortgage origination volumes. This uncertainty is keeping mortgage backed securities spreads wider than historical norms, even as some rate relief appears in the retail mortgage market. The disconnect between improving mortgage rates and rising Treasury yields highlights the complex dynamics in today’s mortgage market, where MBS performance depends heavily on technical factors and investor sentiment. Originators should monitor these conditions closely as they could shift rapidly with new economic data or Federal Reserve communications.

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