WTMS Blog Today = What’s up in Mortgage Today (PM) – 12/23/2025
Holiday trading delivered a perfect example of why markets can move erratically with thin liquidity today. Third-quarter GDP exploded to 4.3% versus the expected 3.3%, sending mortgage bonds tumbling despite the stale data from months ago. MBS dropped almost a quarter point while 10-year yields pushed toward the ceiling of their four-month range.
This is classic holiday distortion where movement size far exceeds the underlying trading volume. The GDP headline looks scary at first glance, but the details tell a more nuanced story. Real final sales to domestic purchasers came in at just 2.9%, and the four-quarter average GDP remains in the modest mid-2% range.
If these numbers had been released during normal trading conditions, the market reaction would likely be much smaller. Instead, we’re seeing outsized volatility with minimal participation from major institutional players. Economic Indicators Paint Mixed Picture
Several key data points hit the wires this morning beyond GDP.
ADP weekly employment change fell to 11.5K from 16.25K previously, showing some labor market cooling. Durable goods orders dropped 2.2% in October, worse than the expected 1.5% decline. Consumer confidence for December came in at 89.1, slightly below the 91.0 forecast but above November’s 88.7 reading.
Industrial production showed mixed signals with October declining 0.1% versus expectations of 0.1% growth. November industrial production recovered with 0.2% growth after the October decline. Core PCE for Q3 hit 2.9%, matching expectations and up from the prior quarter’s 2.6%.
Market Delinquency Concerns Rising
ICE Mortgage Technology’s latest report shows mortgage delinquencies spiking to 3.85%, the highest level in over four years. Past-due loans jumped by 275,000 to 2.3 million borrowers, though calendar effects played a role as November ended on a Sunday. Newly delinquent borrowers surged to 609,000, the largest monthly inflow since May 2020.
This data suggests continued stress in certain pockets of the mortgage market despite the broader economic strength. Industry Outlook for 2026
The MBA forecasts mortgage rates will remain in a narrow 6.0% to 6.5% range as the Fed nears the end of its cutting cycle. Total single-family originations are projected to increase to $2.2 trillion in 2026, driven by gradual pickup in home sales and episodic refinance activity.
Home prices are expected to stagnate nationally, slowing to about 1% growth by late 2025 and turning slightly negative in late 2026. Housing inventory should continue rising, supporting purchase activity while moderating price growth.
Locking vs Floating
We’re entering peak holiday mode where bond markets can experience wider-than-normal movement for seemingly no reason.
The next significant volatility risk from scheduled economic events won’t arrive until the first week of January. With MBS down 1-2 ticks and 10-year yields up roughly 1 basis point at 4.169%, lenders should expect rate sheets to reflect this morning’s weakness. Given the holiday trading environment and limited liquidity, any further economic surprises could produce amplified market reactions.
Today’s Events
– ADP Employment Change Weekly: 11.5K vs 16.25K prior
– Core PCE Prices Q3: 2.90% vs 2.9% forecast, 2.6% prior
– Durable Goods Orders October: -2.2% vs -1.5% forecast, 0.5% prior
– GDP Q3: 4.3% vs 3.3% forecast
– Industrial Production November: 0.2% vs -0.1% prior
– Consumer Confidence December: 89.1 vs 91.0 forecast, 88.7 prior
Bond Pricing
UMBS 30 yr
| Coupon | Price | Intra-Day Change |
| 5.0 | 99.43 | -0.22 |
| 5.5 | 101.16 | -0.08 |
| 6.0 | 102.48 | -0.03 |
GNMA 30 yr
| Coupon | Price | Intra-Day Change |
| 5.0 | 99.45 | -0.22 |
| 5.5 | 100.81 | -0.03 |
| 6.0 | 101.74 | 0.02 |
Treasuries
| Term | Yield | Price | Intra-Day Yield Change |
| 2 yr | 3.539 | 99.925 | 0.04 |
| 3 yr | 3.589 | 99.749 | 0.038 |
| 5 yr | 3.745 | 99.456 | 0.03 |
| 7 yr | 3.95 | 98.789 | 0.024 |
| 10 yr | 4.18 | 98.538 | 0.021 |
| 30 yr | 4.845 | 96.538 | 0.008 |
