WTMS Blog Today = What’s up in Mortgage Today (AM) – 10/28/2025

Mortgage-backed securities are staging a quiet revolt this morning, outperforming Treasuries despite $183 billion in new Treasury supply hitting markets this week. The UMBS 5.0 coupon gained 3 basis points while the 10-year Treasury sits flat at 3.98%, suggesting MBS investors aren’t fazed by the government’s heavy borrowing schedule. This divergence creates a rare window where lenders might see better pricing on mortgage products compared to the underlying Treasury benchmark.

Home price data delivered mixed signals with the Case-Shiller index rising just 1.6% year-over-year, well below the 1.9% forecast and marking a continued slowdown in appreciation. The Federal Housing Finance Agency painted a different picture, showing monthly gains of 0.4% that beat expectations of 0.1%. For mortgage originators, slower price growth could eventually help borrower affordability, but the inconsistent data makes it harder to predict when that relief might arrive.

Consumer confidence held steady at 94.6 in October, slightly beating forecasts and showing Americans remain cautiously optimistic about economic conditions. More importantly for the mortgage market, the labor differential – measuring the gap between those saying jobs are plentiful versus hard to get – jumped to 9.40 from 7.80. This employment strength supports the Fed’s gradual approach to rate cuts and suggests mortgage demand could stabilize if rates continue their recent modest decline.

Today’s 7-year Treasury auction at 1:00 PM will test investor appetite after yesterday’s mixed results saw strong demand for 5-year notes but weaker interest in 2-year paper. If the auction goes well, it could provide some post-supply relief that helps both Treasuries and mortgage rates. Wednesday’s Fed announcement remains the week’s biggest wildcard, with markets expecting a 25 basis point cut but watching for clues about the December meeting.

Locking vs Floating

Current market conditions favor a cautious approach to rate management. Rates remain relatively stable with MBS showing better resilience than Treasuries, but Wednesday’s Fed announcement poses the biggest near-term volatility risk. For loans closing within the next two weeks, locking now provides protection against potential Fed-induced swings.

Longer-term deals might benefit from waiting to see how markets digest this week’s Treasury supply and Fed guidance before committing to rates.

Today’s Events

– Case Shiller Home Prices-20 y/y (Aug): 1.6% vs 1.9% forecast
– FHFA Home Price Index m/m (Aug): 0.4% vs 0.1% forecast
– Consumer Confidence (Oct): 94.6 vs 93.2 forecast
– 7-Year Treasury Note Auction: $44 billion at 1:00 PM

Bond Pricing

UMBS 30 yr
| Coupon | Price | Intra-Day Change |
| 5.0 | 100.05 | 0.02 |
| 5.5 | 101.36 | 0.03 |
| 6.0 | 102.41 | -0.01 |

GNMA 30 yr
| Coupon | Price | Intra-Day Change |
| 5.0 | 100.1 | 0.23 |
| 5.5 | 101.07 | 0.06 |
| 6.0 | 101.85 | -0.01 |

Treasuries
| Term | Yield | Price | Intra-Day Yield Change |
| 2 yr | 3.494 | 100.012 | -0.002 |
| 3 yr | 3.5 | 100.001 | 0.004 |
| 5 yr | 3.612 | 100.059 | 0.009 |
| 7 yr | 3.778 | 100.594 | -0.003 |
| 10 yr | 3.98 | 102.21 | -0.006 |
| 30 yr | 4.545 | 103.346 | -0.001 |