Every now and then, a Thursday comes along where we have to set the record straight on what is actually going on with mortgage rates. That’s because Freddie Mac releases its weekly mortgage rate survey on Thursdays and its methodology can cause confusion in the mortgage market. This particular Thursday is an especially treacherous minefield of misinformation due to the juxtaposition with yesterday’s Fed rate cut. There are already too many people out there repeating the faulty notion that the Fed rate cut means lower mortgage rates. Adding fuel to that fire are various headlines today (quoting Freddie’s data) saying that mortgage rates have fallen to the lowest levels in more than a year. Mortgages rates certainly WERE at the lowest levels in more than year when we reported that fact on Tuesday. But what a difference 2 days make… Actual daily average rates are up 0.20% since then–the fastest 2 day rise since the exact same thing happened after last month’s Fed rate cut. We’d urge those who didn’t absorb the lesson back then to do so today. Bottom line: mortgage rates had already responded to all of the news and data that resulted in the Fed rate cuts. By the time those cuts actually happen, they have no additional power to influence rates (other than the Fed Funds Rate itself, which is not a mortgage rate except in limited cases specific to Home Equity Lines of Credit based on the Prime Rate). How does Freddie get it so wrong? They don’t. They just get it “so late.” Freddie is reporting their rate as an average of last Thursday through this past Wednesday, and 4 out of those 5 days saw exceptionally low rates. As we noted yesterday, mortgage rates were already surging higher, but not until the afternoon. This means even yesterday’s rate spike was too late in the day to push Freddie’s average any higher. In other words, it was perfectly bad timing for Freddie’s Thursday release to be as low as it possibly could have been.
Source: Mortgage News Daily
Are you ready to change the time on your car’s clock, or leave it and let it be right again on March 8, 2026? Some technology is cool. Imagine controlling your iPhone entirely with your eyes. (That would really keep me from riding my bike and talking on the phone!) Food delivery robots have human names and blinking eyes. But they’re not our friends any more than the Russians are our allies. Every lender and title company knows that cybercriminals don’t take breaks, and neither do data breaches. The TransUnion breach exposed the personal details of over 4.4 million Americans. If your information was among them, your identity could already be at risk. Bank hacking incidents have doubled since 2023, and bank investors are spooked. When you receive a letter or an email saying your personal information may have been compromised, do you even care? Do you look at maps of cyber-attacks, and just shrug and hope your IT department is on the ball? Good luck. (Today’s podcast can be found here and this week’s are sponsored by Optimal Blue, the only end-to-end capital markets platform built to power performance, precision, and profitability, helping lenders of all sizes operate more efficiently, manage risk more effectively, and maximize results. Today’s has an interview with Finance of America’s Adam Potafiy on reverse mortgages and how they’re being reengineered for the next generation of clients.) Services, Products, Software, and Tools for Lenders and Brokers
Source: Mortgage News Daily
The simplest way to understand yesterday’s post-Fed sell-off is as follows. The market’s enthusiasm for 3 Fed rate cuts in 2025 had grown a bit too large for the Fed’s liking. The market was nearly 100% certain of another cut in December. The Fed was not as certain, and Powell made it a point to say so yesterday. The result is a mild re-set in yields back to levels that are more consistent with a December cut being a solid possibility, but not a full lock. Now we wait to see if the non-gov econ data tips those scales in one direction or the other. This morning’s additional selling is an acceptable and arguably inconsequential level of follow-through to the brunt of yesterday’s “reset” vibes.
In terms of specific Fed rate expectations:
Source: Mortgage News Daily
Today was not a foregone conclusion and there was no way to know ahead of time that it would end like this, but the outcome is exactly why we’ve gone to such lengths to warn you about the potentially paradoxical reaction to a Fed rate cut. Too many people repeat the fallacy that mortgage rates will benefit from a Fed cut. We have several recent examples of the exact opposite happening, and now today adds another strong reminder with the average lender moving higher at the fastest pace since the day after the last Fed meeting. Why does this happen? It has nothing to do with the rate cut itself. As we warned, volatility would come from Fed Chair Powell’s press conference. In today’s case, Powell said that another rate cut in December was not a foregone conclusion. This was at odds with the market’s expectations, so there was a rush to reprice those expectations. As always, today’s rates instantly adjust to expectations for rates in the future (the main reason that Fed rate cuts do little-to-nothing to impact market rates). In relative terms, rates are still lower than most of the past year, but back up to similar levels seen on October 14/15th.
Source: Mortgage News Daily
Another Hawkish Powell Press Conference Harshes Bonds’ Mellow
The Fed cut rates and ended QT. Neither were surprises for markets and neither had an impact. The press conference was hawkish, however, with Powell saying a December cut was far from a foregone conclusion. This is very much counter to the market’s expectation that a December cut was a lock. Fed Funds Futures tanked and yields surged about 8bps in the 10yr. MBS lost about 3/8ths and negative reprices continue to roll in.
Econ Data / Events
Case Shiller Home Prices-20 y/y (Aug)
1.6% vs 1.9% f’cast, 1.8% prev
CaseShiller 20 mm nsa (Aug)
-0.6% vs — f’cast, -0.3% prev
FHFA Home Price Index m/m (Aug)
0.4% vs 0.1% f’cast, -0.1% prev
FHFA Home Prices y/y (Aug)
2.3% vs — f’cast, 2.3% prev
CB Consumer Confidence (Oct)
94.6 vs 93.2 f’cast, 94.2 prev
Labor differential: 9.40 vs 7.80 prev
Market Movement Recap
10:26 AM modestly weaker overnight and holding steady so far. MBS down 1 tick (.03) and 10yr up 1.6bps at 3.992
01:28 PM 10yr yields are up 2.9bps at 4.005 and MBS down 3 ticks (.09)
01:41 PM MBS now down 5 ticks (.16) and 10yr up 3.5bps at 4.012
Source: Mortgage News Daily
Bonds are a hair weaker this morning with losses showing up in the overnight session and mostly flattening out in domestic trading. Without any big ticket data this morning, this aimless drift is standard operating procedure–especially considering the pre-Fed consolidation was largely assumed to be seen via the modest weakness at the end of last week. That brings us to the Fed this afternoon. Forget the rate cut. That’s 100% priced in. Instead, we have two other considerations: Powell’s tone at the press conference and the potential inclusion of a change to quantitative tightening in the announcement. Many of our clients have high hopes that an end to QT would be some sort of big victory for bonds, but we’d caution that it’s not a game changer. QT is ending soon one way or the other, and the Fed has been clear about that. It’s not as if this would constitute QE-levels of bond buying. Bottom line, 2pm or 2:30pm ET could definitely bring some volatility, but nothing that creates big, lasting momentum. For that, we continue to wait for the shutdown to end and for data to return.
Source: Mortgage News Daily
“The U.S. Senate is considering a bill that would tax Botox. When Botox users heard this, they were horrified. Well, I think they were horrified. It’s difficult to tell.” Is anyone motivated to end the government shutdown? I mean, really motivated? One side sticking to their guns about healthcare, the other side is fine with slowing down the economy to move rates lower. And now we have the expiration of SNAP benefits. The impact on the overall economy seems to be minimal, although we (including the Fed) aren’t receiving the usual stream of government economic data, although we are seeing the labor market slow, and the economy will follow. We do know that the average rate on a 30-year mortgage fell to 6.19 percent last week, the best rate borrowers have seen in three years outside brief dips in 2024. Meanwhile, lenders who have an eye on the future are constantly watching the cost per loan. What are you trying to do to improve your pull through? After all, higher pull through automatically lowers your cost per funded loan. Lenders continue to want to offer all products to any borrower that walks through the door, or calls. So non-Agency, home equity, and adjustable-rate mortgages are all the rage. (Today’s podcast can be found here and this week’s are sponsored by Optimal Blue, the only end-to-end capital markets platform built to power performance, precision, and profitability, helping lenders of all sizes operate more efficiently, manage risk more effectively, and maximize results. Today’s has an interview with DaylightAML’s Bob Simpson on the growing debate around making Agency loans assumable: examining whether such a move could unlock housing market liquidity or create new pricing and equity challenges, how it might impact lenders, investors, and borrowers, and what lessons policymakers can draw from past market interventions.)
Source: Mortgage News Daily
Modestly Stronger Ahead of Fed Day
Without any market moving econ data on Tuesday, bonds finally managed to find a bid. Or at least that’s how it seemed during domestic hours. When considering the overnight session, we actually saw yields hit their lows of the day before the open, sell-off a bit at 8:20-8:40am surrounding a weekly employment update from ADP, and then return to the best levels mid-day. The 7yr auction was slightly weaker, but bonds didn’t mind (perhaps just relieved to have supply in the rearview). With tomorrow’s Fed cut a 100% certainty, volatility potential depends on Powell’s press conference as well as whether or not the Fed makes any sort of announcement to end quantitative tightening (something that has been increasingly speculated by trade desks). The QT news wouldn’t be as big as it sounds, but it might help a bit (or hurt a bit if it’s not announced).
Econ Data / Events
Case Shiller Home Prices-20 y/y (Aug)
1.6% vs 1.9% f’cast, 1.8% prev
CaseShiller 20 mm nsa (Aug)
-0.6% vs — f’cast, -0.3% prev
FHFA Home Price Index m/m (Aug)
0.4% vs 0.1% f’cast, -0.1% prev
FHFA Home Prices y/y (Aug)
2.3% vs — f’cast, 2.3% prev
CB Consumer Confidence (Oct)
94.6 vs 93.2 f’cast, 94.2 prev
Labor differential: 9.40 vs 7.80 prev
Market Movement Recap
10:38 AM 2 way volatility early. MBS back to unchanged. 10yr still weaker, up 1.8bps at 3.993
12:52 PM MBS up 1 tick (.03) and 10yr up just under 1bp at 3.983
02:11 PM minimal reaction to 7yr auction. It was slightly weaker than expected, but yields are a hair lower since before the auction. 10yr up 0.6bps at 3.98 and MBS still up 1 tick (.03).
04:19 PM Heading out at the best levels of the day with MBS up an eighth and 10yr down 0.2bps at 3.973
Source: Mortgage News Daily
Rates have been flirting with long term lows over the past 2 weeks, but today made it official. Today’s average top tier 30yr fixed rate perfectly matched that seen on September 16th, 2025. That’s the lowest it’s been since September 2024, and we’re so close to those lows that it’s just as fair to say rates are the lowest they’ve been in over 3 years. Today’s move didn’t come in response to anything specific. In fact, most of the justification for it was seen in yesterday’s trading session and simply didn’t have an opportunity to impact the average lender until this morning. Incidentally, there are similar vibes this afternoon as bonds have once again improved too late in the day for most lenders to go to the trouble of adjusting mortgage rates. That means that if bonds (upon which rates are based) manage to hold their current levels through tomorrow morning, rates could be a bit lower again tomorrow. Of course, after that, there’s a fair amount of potential volatility associated with the Fed announcement at 2pm ET. We already know the Fed will be cutting rates tomorrow and that rate cut has no bearing on what happens to mortgage rates going forward. Rather, it would be the tone of the Fed’s press conference, or the nature of any changes in the Fed’s bond buying policies (something that might be included in tomorrow’s statement). Bottom line: rates are already low today. The Fed rate cut won’t make them go any lower. Other info from the Fed could make them go EITHER higher or lower, depending on what’s said.
Source: Mortgage News Daily
My cat Myrtle never liked Halloween, apparently believing it was for amateurs. Our nation has plenty of interesting historical sites related to ghosts and unpleasant things… like Salem, Massachusetts. It lives with the history of the Witch Trials of 1692 during which 19 women and men were executed on charges of witchcraft. Today, the most frightening thing about the place is the traffic in October, but also somewhat frightening is the price of real estate: if you want a decent place there, it’s going to set you back a mil. Speaking of home prices and U.S. transactions, foreign buyers are alive and well, apparently undeterred by the high prices and with a good percentage of them doing all-cash deals. At least affordability problems have been easing somewhat, with the gradual decline of mortgage rates this year. We all know that increasing regulatory restrictions and requirements will not solve consumer affordability challenges, and here is a White Paper that discusses market-based Homeowner Affordability Strategies that benefit many industries and homeowners, the pressing challenge of housing affordability amid the escalating impact of natural disasters, a crisis that demands innovative, collaborative solutions to ensure resilient and sustainable communities. (Today’s podcast can be found here and this week’s are sponsored by Optimal Blue, the only end-to-end capital markets platform built to power performance, precision, and profitability, helping lenders of all sizes operate more efficiently, manage risk more effectively, and maximize results. Today’s has an interview with nCino’s Casey Williams on the latest wave of AI-powered mortgage innovations and how these tools are redefining lender efficiency, borrower experience, and what’s next in intelligent mortgage automation.)
Source: Mortgage News Daily