WTMS Blog Today = What’s up in Mortgage Today (PM) – 09/30/2025

The mortgage-backed securities market closed mixed on Monday, with UMBS pricing showing modest weakness amid ongoing concerns about Federal Reserve policy direction. The 10-year Treasury yield remains elevated near 4.05%, continuing to pressure mortgage rates and MBS valuations as investors digest economic data and Fed commentary. Lock/float considerations favor floating for short-term closings given the current volatility pattern. Market participants are closely watching the upcoming employment data releases this week, as strong job numbers could further delay expectations for additional Fed rate cuts. The MBS Highway National Housing Index dropped 2 points in September to 40, reflecting the seasonal slowdown and elevated rate environment’s impact on housing activity. GNMA securities traded slightly better than conventional MBS, benefiting from government backing amid market uncertainty.

Treasury trading showed continued pressure as investors position for potential fiscal policy changes and inflation concerns heading into the fourth quarter. The yield curve remains inverted, though less severely than earlier this year, with 2-year notes trading closer to 10-year levels. Credit spreads in the mortgage market have widened slightly, indicating increased risk premium demands from investors. Mortgage originators are reporting significant volume declines as purchase activity remains constrained by affordability challenges. Refinancing activity continues at historically low levels with current rates well above recent homeowner borrowing costs.

The disconnect between primary and secondary mortgage markets persists, with lenders maintaining wider spreads to protect against pipeline risk. Industry professionals should monitor tonight’s Asian trading and tomorrow’s economic releases for potential market direction changes. Current conditions suggest maintaining defensive positioning while watching for any Fed communication that might signal policy pivots.

Subscribe to get this essential mortgage market intelligence delivered to your inbox daily, for free.