Good morning on this best day of the week Wednesday from your Hometown Lender,

Yesterday saw mortgage bonds move much lower to start the day which pushed rates up. We did claw back some of the losses through the late morning but then see it all drift lower again as the day went on. Basically, volatile through the whole day. Rates are back to almost the same pricing we had to start the month.

Rates today are similar, but we aren’t in store for another big jump in rates like we saw yesterday. Greenland and the geopolitical and economic tensions around it will get all the headlines again today, but yesterday rate sheets got hurt quite a bit by the big bond selloff in Japan after Prime Minister Sanae Takaichi promised a big consumption-tax giveaway to buy votes in an upcoming election. That has settled today, helping mortgage bonds start the day with some gains that could help offset yesterday’s losses in mortgage bonds through the day.

Reprice risk today is moderate, traders seem to have settled down, but anything new from Davos about the Greenland situation could cause more volatility. If there are no new announcements and if tensions don’t rise, rates should remain about the same today. Improving is not in the cards though, unless some kind of miraculous agreement were to happen today, which is unlikely.

I liked it better when rates were based on economic policy and news and not political.

From a higher viewpoint:

Quick Snapshot (Wed, Jan 21, 2026)

10-year Treasury: ~4.27% this morning after yesterday’s spike; Tuesday’s official 10-yr CMT close: 4.30%.
Fed funds: 3.50%–3.75% target range; EFFR ~3.64% recently.
Mortgage bonds (UMBS 30yr 5.5): 101-05 (Tue close), slightly firmer on the day (+0-01).
Mortgage rates (real-world reads):
MND daily index: 30-yr fixed 6.21% (Tue), +14 bps on the day.
Freddie Mac PMMS (weekly): 30-yr 6.06%, 15-yr 5.38% (as of Jan 15).
Housing pulse: Pending Home Sales (Dec): -9.3% to 71.8; Builder sentiment (NAHB HMI Jan): 37.
Big driver: geopolitics/trade headlines (Greenland/tariffs) sparked a bond selloff → higher yields → higher rate sheets.

1) What Hit This Morning (Housing Data)

Pending Home Sales (Dec): down 9.3% to 71.8 (a five-month low), -3.0% YoY—a pretty loud “affordability + low inventory” signal.

Narrative you can use:

Buyers haven’t disappeared—they’re just price-sensitive and rate-sensitive. When rates pop, signed contracts feel it fast.

2) Fed Watch

Next FOMC: Jan 27–28, 2026 (press conference on the 28th).
Market lean: heavy bias toward no change at this meeting (various market coverage puts “hold” probability in the high-90s).
Fed messaging: Jefferson recently said policy is “well positioned,” and markets were pricing only a small chance of a January cut.
Economist consensus (Reuters poll): many expect the Fed to hold through at least March, with cuts (if any) later in 2026.

3) Where Mortgage Rates Actually Are

Here’s the “don’t shoot the messenger” section:

30-yr fixed: ~6.21% (MND daily index, last updated Tue).
15-yr fixed: ~5.75% (MND daily index).
Freddie Mac weekly anchor: 30-yr 6.06% / 15-yr 5.38% (as of Jan 15).

What this tells us: we’re still in a low-6s world, but headline-driven spikes can slap rate sheets around even when the broader trend is calmer.

4) Housing Market Check

Contracts are wobbling that Pending Home Sales drop is the kind of print that usually precedes softer closed-sales data later.
Builders are not feeling brave: NAHB HMI 37 (still negative territory), with traffic 23 and expectations 49—translation: incentives live on.

5) Political Backdrop & Fed Independence

Markets did the thing markets always do: price uncertainty like it’s a tax.

Trade/Greenland headlines helped drive yesterday’s yield surge.
Meanwhile, Reuters coverage notes rising political pressure and institutional noise around the Fed that investors are watching for “independence risk.”

6) What This All Means for Rates Going Forward (3-Scenario Grid)

Base case (most likely): “Range, with whiplash.”

Rates chop sideways in the low-6s while headlines and incoming data fight for control. (MBS is holding up okay; Treasuries are the drama queen.)

Better case: “Calmer headlines + softer data = grind lower.”

If geopolitical heat cools and housing data stays soft (like today’s pending-sales print), bonds can retrace, giving lenders room to improve.

Worse case: “Trade escalation / foreign selling fears = higher yields.”

If tariff rhetoric ramps and global buyers hesitate, yields can stay elevated—mortgage rates follow.

7) Practical Takeaways

Agents: Today’s contract data supports a simple message—buyers need strategy, not just optimism. (Seller concessions + rate buydowns are still doing real work.)
Buyers: Don’t anchor to “the perfect rate.” Anchor to payment + plan: lock windows, float rules, and a backup option (temporary buydown / ARM / etc.).
Sellers: If you’re priced at yesterday’s market, the market will remind you it’s Wednesday. (With receipts.)

8) Lock vs Float (Today)

Given the headline sensitivity and the near-term FOMC approaching, the market is primed for sudden swings.

Leaning lock: closing soon, tight qualification, low tolerance for surprises.
Leaning float: longer timelines and you have a clear trigger to lock (yield threshold / lender reprice risk rules).

Stay safe and make today great!