Mortgage News Daily

Did Japan Sell Treasuries Today?
Did Japan Sell Treasuries Today? Bonds sold off medium big on Friday in a move that offered little by way of overt explanations. There were reports of "rate checks" in the USD/JPY market--something that CAN precede the selling of U.S. bonds in order to buy JPY. Notably, there were no reports of actual intervention, but sometimes these things aren't revealed until the following trading day. If this explains today's weakness (and to be clear, we're not sure it does), it would be good for the U.S. bond market as it would mean 10yr yields still held under 5% despite added, artificial pressure. Causality investigations aside, we'd focus on the fact that 10yr yields held under 5% (albeit just barely), which is right where they were on the Tuesday afternoon before Fed day.  Econ Data / Events Building Permits (Aug) 1.394M vs 1.41M f'cast, 1.433M prev Continued Claims (Sep)/05 1730.0K vs 1780K f'cast, 1774K prev Housing starts number mm (Aug) 1.275M vs 1.31M f'cast, 1.239M prev Jobless Claims (Sep)/12 196K vs 208K f'cast, 206K prev Philly Fed Business Index (Sep) 37.8 vs 30.5 f'cast, 47.4 prev Philly Fed Prices Paid (Sep) 48.60 vs -- f'cast, 40.90 prev Market Movement Recap 08:41 AM MBS down roughly a quarter point and 10yr up 4.6bps at 4.979 10:30 AM MBS down 3/8ths and 10yr up 7.2bps at 5.005 02:14 PM MBS down 10 ticks (.31) and 10y up 6.6bps at 4.999 05:11 PM MBS down 3/8ths and 10yr up 6bps at 4.993
Mortgage Rates Only Modestly Higher Despite Bond Market Losses
We'd be the first to remind you that mortgage rates are primarily determined by trading levels in the bond market--specifically those for mortgage-backed securities (MBS). That said, there are days where rates don't do exactly what MBS suggest. Today was one of them. According to the bond market, mortgage rates should have been much higher than they were yesterday. As it stands, the average lender was just barely higher.  The discrepancy comes down to the volatility experienced earlier in the week. Lenders have some latitude when it comes to setting mortgage rates. If the underlying market is moving rapidly, lenders may make bigger or smaller adjustments depending on the direction of the move.  In this week's case, yesterday's bond market improvement suggested a sharper drop in rates than we actually saw. In other words, lenders were playing it slightly safer than they needed to. That turned out to have been a good decision, and it meant that they weren't forced to chase the bond market into weaker territory today. The bottom line is that today's rates were technically only 0.01% higher than yesterday's on average, and also right in line with the rates seen on Wednesday morning before the Fed announcement. 
Pending Sales Rebound Slightly as Regional Results Diverge
Pending home sales edged higher in August as gains in the South and West offset declines in the Northeast and Midwest. The National Association of REALTORS® (NAR) Pending Home Sales Index (PHSI), which tracks signed contracts on existing homes, increased 0.3% from July but was down 4.7% from a year earlier. The modest increase came despite another period of elevated mortgage rates. NAR Chief Economist Lawrence Yun said income growth has been outpacing home price growth, but higher borrowing costs continue to limit the resulting improvement in buying power and housing demand. Pending sales remain roughly 30% below pre-pandemic levels nationally. Activity peaked in 2021 when mortgage rates were near 3%, suggesting that lower borrowing costs remain an important factor in bringing sidelined demand back into the market. Regional Results Area Monthly Change Annual Change Additional Detail Northeast -4.2% -3.9% Among the fastest home price growth Midwest -1.6% -4.9% Among the fastest home price growth South +2.3% -3.8%   West +3.0% -6.7%  
More Mixed Results in Residential Construction Report
Residential construction was mixed in August as housing starts recovered in the single-family sector, while building permits declined from July levels and completions fell sharply. The latest Census Bureau data points to continued unevenness in residential construction, with builders pulling back somewhat on new authorizations even as single-family construction picked up. Privately owned housing starts fell 2.6% to a seasonally adjusted annual rate of 1.275 million , down 1.2% from the August 2025 pace. Single-family starts, however, increased 7.6% to 918k , while starts for buildings containing five units or more fell to 344k . Building permits moved in the opposite direction, declining 2.7% from July to an annual rate of 1.394 million , though they remained 3.5% above the August 2025 rate. Single-family authorizations fell 1.8% to 878k , while permits for buildings containing five units or more came in at 467k . The August data underscores the uneven pace of residential construction. Single-family starts rebounded after falling in July, while permits softened modestly. The pullback in multi-family starts was more pronounced, although that segment can be considerably more volatile from month to month. Housing completions also declined sharply in August, falling 11.9% to a seasonally adjusted annual rate of 1.128 million , down 27.1% from a year earlier. Single-family completions decreased 10.4% to 816k , while completions for buildings containing five units or more came in at 302k .
Labor, Land, and Rising Costs Push Builder Confidence to 3 Year Lows
Builder sentiment took a meaningful step backward in September, with higher mortgage rates, rising construction costs and worsening labor shortages weighing on the market for newly built homes. The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) fell three points to 32 , matching September 2025 as the lowest level in over 3 years.  Breakdown of various component indices: HMI Component August September Change Current sales conditions 39 35 -4 Sales expectations 43 37 -6 Prospective buyer traffic 23 23 Unchanged “Buyer traffic has weakened across much of the country, largely because of rising mortgage rates,” said NAHB Chairman Bill Owens. Owens also pointed to higher material costs, rising gas and diesel prices and persistent labor shortages as ongoing challenges for builders. NAHB Chief Economist Robert Dietz added that builders also reported difficulty finding available lots, with 42% rating current lot availability as poor and another 38% rating it as fair. Builders increased their use of pricing incentives in September. The share reporting price cuts rose to 38% from 35% in August, while the average price reduction remained at 6% for the sixth consecutive month. Sales incentives were also more common, with 66% of builders reporting their use, up from 63% in August and the highest share since December.
Refi Demand Falls, But Still Higher Than Early 2025 Levels
Mortgage application activity weakened again last week, with higher mortgage rates weighing on both purchase and refinance demand. The Mortgage Bankers Association (MBA) reported a 4.1% decrease in total application volume on a seasonally adjusted basis for the week ending September 11. The results include an adjustment for the Labor Day holiday. Purchase applications fell 1% from the previous week on a seasonally adjusted basis. The unadjusted Purchase Index dropped 13%, although that figure was heavily affected by the holiday. More notably, purchase activity was 19% lower than the same week one year ago, reversing the modest year-over-year gains seen in recent weeks. Refinancing continued to lose ground as well. The Refinance Index fell 9% from the previous week and was 65% below year-ago levels. Refinances accounted for just 39.4% of total application volume, down from 40.9% the previous week and marking another step lower as elevated rates eliminate much of the potential benefit for borrowers who might otherwise refinance. "Mortgage rates followed and were almost 7%," said Joel Kan, MBA's Vice President and Deputy Chief Economist, citing ongoing concerns over spiking energy prices, persistently high inflation, and future monetary policy. Kan noted that the 30-year fixed rate reached 6.97% , its highest level since May 2025, as the 10-year Treasury yield moved closer to 5%.
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Why Are Bonds Selling Today?
After Thursday's rather triumphant trading session in the bond market, today's moderate losses may be unpleasant or surprising to some. But they should be neither. Thursday was a bit exuberant in a good way, and Fridays often see position squaring. A bit of a pull-back is not only survivable but arguably more logical this morning, especially with oil prices being modestly higher. Bottom line: if MBS manage to hold this line without losing much more than a quarter point, and if 10yr yields end below 5%, compare today's closing levels to Tuesday's, consider that the Fed hiked this week and added 1-2 more hikes to the near-term outlook, and that bonds are somehow still better than the day before Fed day. 
Even More Confirmation Throughout The Day
Even More Confirmation Throughout The Day It was heartening to see bonds erase yesterday's losses by the time domestic trading got underway today. Unmitigated victory would have required flat/higher oil prices. Instead, we were forced to wonder how much credit to give lower oil prices versus the expectation that longer-term rates would paradoxically appreciate a more hawkish Fed stance. This uncertainty increasingly vanished throughout the day. Oil prices steadily rose more than $3 between 8:30am and 1pm, but bonds were sideways to stronger the entire time. There's still some caution suggested by a technical floor at 4.94%, but yields are now flirting with a break below that level in after-hours trading (even as oil prices remain more than $2 higher than this morning). We're not out of the woods yet, but today looks to have been a step in the right direction. All this having been said, rates aren't immune from future spikes if econ data, issuance, or fuel prices surprise to the upside.  Econ Data / Events Building Permits (Aug) 1.394M vs 1.41M f'cast, 1.433M prev Continued Claims (Sep)/05 1730.0K vs 1780K f'cast, 1774K prev Housing starts number mm (Aug) 1.275M vs 1.31M f'cast, 1.239M prev Jobless Claims (Sep)/12 196K vs 208K f'cast, 206K prev Philly Fed Business Index (Sep) 37.8 vs 30.5 f'cast, 47.4 prev Philly Fed Prices Paid (Sep) 48.60 vs -- f'cast, 40.90 prev Market Movement Recap 12:21 PM MBS up almost half a point and 10yr down 7.7bps at 4.942 01:56 PM MBS up half a point and 10yr down 7.2bps at 4.946 03:20 PM Best levels of the day. MBS up 18 ticks (.56) and 10yr down 8.5bps at 4.934
Mortgage Rates Back Near Lows of The Week
We love it when a plan comes together. Heading into yesterday's Fed announcement, the hope was that a rate hike would reassure investors in longer-term bonds (like those that underlie mortgage rates). We also didn't expect that benefit to necessarily play out on the day of the hike itself (it didn't).  In fact, Fed day threw rates a bit of a curveball--not because the Fed hiked, but rather, due to the implications for additional hikes in Fed Chair Warsh's press conference. Thankfully, as of today, Warsh's unexpected hawkishness proved to be a temporary inconvenience for the market and rates are now back to the lowest levels of the past 4 days (and very close to the lowest levels of the week seen on Monday).  There's no guarantee about where we'll go from here, but common themes remain important. These include big ticket economic data and oil price volatility relating to Iran war developments. After hitting 7.24% yesterday, the average top-tier 30yr fixed rate is back down to 7.19%.