WTMS Blog Today = What’s up in Mortgage Today (PM) – 10/30/2025

Markets delivered a reality check after yesterday’s Fed meeting as mortgage bonds fell despite the widely expected rate cut. The UMBS 5.0 coupon dropped nearly 20 basis points in early trading, signaling that rates may move higher for borrowers. Chair Powell’s cautious tone about December cuts appears to have reset market expectations, curbing the enthusiasm that had been building around aggressive Fed easing.

The Fed’s balance sheet policy shift is adding another layer of complexity for mortgage originators. Starting December 1st, the central bank will end quantitative tightening and begin reinvesting agency securities proceeds into Treasury bills rather than mortgage bonds. This technical change could pressure MBS prices over time, as the Fed becomes a smaller buyer in the mortgage market.

Earnings Season Delivers Mixed Results

Freddie Mac reported $2.8 billion in net income for Q3 2025, down 11% year-over-year due to credit reserve builds. The GSE’s earnings decline reflects a more cautious stance as the housing market shows signs of slowing. For mortgage sellers, this signals potential tightening in credit standards or pricing adjustments ahead.

Redwood Trust painted a brighter picture with record $6.8 billion in cumulative loan production across platforms. The REIT’s mortgage banking revenues hit their highest level since Q3 2021, demonstrating strong execution in the private label space. Capital allocated to mortgage banking operations jumped 84% since Q2 2024, indicating robust investor appetite for non-agency products.

Market Dynamics Point to Volatility

The disconnect between Fed policy and mortgage rates continues to confound the market. Yesterday’s 25 basis point fed funds cut actually pushed mortgage rates higher, as traders questioned the path for December. Powell’s reluctance to signal another cut has recalibrated expectations from a near certainty to merely a possibility.

Treasury yields are pushing higher across the curve, with the 10-year climbing to 4.088% from yesterday’s close at 4.06%. This upward pressure typically translates to higher mortgage rates within 24-48 hours, creating headwinds for refinance activity that had been building momentum.

Today’s Events

– 9:55 AM: Fed Bowman Speech
– 1:15 PM: Fed Logan Speech

Bond Pricing

UMBS 30 yr
| Coupon | Price | Intra-Day Change |
| 5.0 | 99.58 | -0.04 |
| 5.5 | 101.09 | -0.01 |
| 5.0 | 99.72 | -0.01 |