WTMS Blog Today = What’s up in Mortgage Today (AM) – 10/27/2025

Markets are consolidating ahead of the Federal Reserve meeting as economic data remains sparse due to the ongoing government shutdown. UMBS 5.0 coupons dropped 3 basis points to 99.81 in early trading while the 10-year Treasury yield climbed 20 basis points to 4.022%. This pre-Fed positioning suggests traders are cautious about potential policy changes despite the widely expected 25 basis point rate cut.

The mortgage-backed securities market is showing signs of weakness with broader selling pressure after the markets opened. Both UMBS and GNMA securities declined across most coupons as investors prepare for this week’s Treasury auction cycle. The combination of pre-Fed uncertainty and $139 billion in new Treasury supply is creating headwinds for mortgage pricing.

Major Industry News

The Mortgage Bankers Association delivered a sobering forecast at its Las Vegas convention, warning that rates will remain above 6% through 2026. Chief Economist Mike Fratantoni cited the 10-year Treasury’s 4%-4.5% range as evidence that mortgage rates are more likely to move higher than lower. This represents a significant shift from earlier optimism about returning to sub-6% rates.

Fannie Mae announced key leadership changes with Jake Williamson becoming acting head of Single-Family and Tom Klein taking over as acting general counsel. Both executives bring roughly two decades of experience at the GSE during a critical period as speculation grows about potential privatization by late 2025. The changes follow CEO Priscilla Almodovar’s departure and are part of a broader management restructuring.

Locking vs Floating

Current market conditions favor a cautious approach to rate exposure. Despite seemingly friendly September CPI data, rates have nudged higher over the past two days, building a case for current levels representing a floor. The Fed’s press conference tone and this week’s accelerated Treasury auction cycle could drive additional volatility, making locks attractive for loans closing within 30 days.

Today’s Events

– 11:30 AM: 2-Year Note Auction ($69 billion)
– 1:00 PM: 5-Year Note Auction ($70 billion)

Bond Pricing

UMBS 30 yr
| Coupon | Price | Intra-Day Change |
| 5.0 | 99.8 | -0.05 |
| 5.5 | 101.23 | -0.01 |
| 6.0 | 102.36 | 0.01 |

GNMA 30 yr
| Coupon | Price | Intra-Day Change |
| 5.0 | 99.85 | -0.05 |
| 5.5 | 100.95 | 0 |
| 6.0 | 101.79 | -0.01 |

Treasuries
| Term | Yield | Price | Intra-Day Yield Change |
| 2 yr | 3.515 | 99.972 | 0.022 |
| 3 yr | 3.523 | 99.936 | 0.022 |
| 5 yr | 3.639 | 99.937 | 0.021 |
| 7 yr | 3.815 | 100.366 | 0.015 |
| 10 yr | 4.024 | 101.848 | 0.004 |
| 30 yr | 4.597 | 102.484 | -0.005 |