WTMS Blog Today = What’s up in Mortgage Today (PM) – 12/16/2024

Mortgage markets closed another volatile session as Treasury yields continued their upward march. The benchmark 10-year Treasury note pushed higher, pressuring mortgage-backed securities across all coupons. This movement signals tighter pricing conditions for originators heading into Tuesday’s trading.

UMBS securities struggled to find footing amid persistent selling pressure. Current coupon prices dropped as investors rotated out of mortgage paper in favor of higher-yielding alternatives. The spread between UMBS and Treasury securities widened, creating headwinds for rate sheet improvements.

GNMA securities followed the broader MBS weakness but showed slightly better resilience than conventional paper. Government-backed securities maintained better bid levels due to their credit quality advantage. However, the overall trend remains challenging for mortgage originators looking to improve pricing.

The 30-year mortgage rate climbed to 6.77%, marking its fourth consecutive daily increase. This surge reflects the bond market’s response to persistent inflation concerns and Fed policy uncertainty. Originators should prepare for potential rate sheet adjustments as secondary market conditions deteriorate.

Economic data continues to support the narrative of a resilient economy, keeping upward pressure on long-term rates. Labor market strength and consumer spending patterns suggest inflation may remain sticky. These factors contribute to the challenging environment facing mortgage professionals today.

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