WTMS Blog Today = What’s up in Mortgage Today (AM) – 10/22/2025

Bond markets are experiencing their first taste of weakness in days after an impressive rally run. UMBS securities opened modestly lower after yesterday’s session closed at the best levels in over a year. The pullback appears overdue given the consistent strength bonds have shown since mid-October.

MBS pricing is showing early signs of profit-taking as traders digest recent gains. The 5.0 coupon UMBS dropped to 99.92, down from yesterday’s stronger close. This minor retreat comes after bond markets reached levels not seen since last spring, making some consolidation almost inevitable.

Treasury yields are creeping higher across the curve in morning trade. The 10-year note moved up to 3.97 percent, still holding near multi-month lows but showing early signs of resistance. When Treasury yields rise modestly like this, it typically signals bond market participants are taking profits rather than reversing the broader trend.

Philadelphia Fed Non-Manufacturing data disappointed significantly this morning, falling to -22.2 versus the previous -12.3 reading. Employment components also weakened sharply, dropping to -4.5 from the prior +9.4 level. This economic softness should theoretically support bond prices, but markets may be focused more on technical levels than fundamentals today.

Refinance demand continues surging as rates hover near year-long lows for many borrowers. Applications for refinancing jumped 4 percent last week and stand 81 percent higher than the same period last year. Purchase applications dropped 5 percent for the week, but remain 20 percent above year-ago levels, suggesting the housing market benefits from lower rates despite ongoing affordability challenges.

FHFA Director Pulte indicated that GSE privatization could happen as soon as late 2025 in recent social media posts. This represents a significant policy shift that could reshape the mortgage market landscape for lenders and investors. The timing coincides with the Trump administration’s renewed focus on reducing government involvement in housing finance.

Locking vs Floating

Risk-averse clients should remain in lock mode as rates continue flirting with longer-term lows where profit-taking becomes more likely. Risk-tolerant borrowers can continue floating in the absence of major corrections, but should be prepared for volatility. The recent rally has been impressive, but consolidation periods are normal after such strong moves.

Today’s Events

– Philly Fed Non-Manufacturing Business Activity: -22.2 vs -12.3 previous
– MBA Refinance Index (Oct 17): 1168.0
– MBA Purchase Index (Oct 17): 166.0
– 20-Year Bond Auction: 1:00 PM

Bond Pricing

UMBS 30 yr
| Coupon | Price | Intra-Day Change |
| 5.0 | 99.92 | -0.04 |
| 5.5 | 101.27 | 0.02 |
| 6.0 | 102.4 | 0.01 |

GNMA 30 yr
| Coupon | Price | Intra-Day Change |
| 5.0 | 99.95 | -0.07 |
| 5.5 | 101.01 | 0.04 |
| 6.0 | 101.9 | 0 |

Treasuries
| Term | Yield | Price | Intra-Day Yield Change |
| 2 yr | 3.457 | 100.082 | 0.002 |
| 3 yr | 3.461 | 100.111 | 0.004 |
| 5 yr | 3.569 | 100.255 | 0.003 |
| 7 yr | 3.75 | 100.762 | 0.004 |
| 10 yr | 3.97 | 102.294 | 0 |
| 30 yr | 4.55 | 103.257 | 0.003 |