You are currently viewing Market Analysis 10.29.25: Reprice Risk High

Market Analysis 10.29.25: Reprice Risk High

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

As expected, rates are sitting where they were yesterday which certainly isn’t a bad thing since most rate sheets yesterday were the best we’ve seen since September (not by much, but still a win is a win). The catch: the best pricing in September was right before a Fed meeting, when the Fed cut rates, and mortgage rates moved higher following the cut. That also happened in September ’24, although rates jumped much higher for different reasons. Anyway, reprice risk today is high, and we need to be on guard for the signals that bonds give us today.

Remember, it’s not just what the Fed does and what Fed Chair Jerome Powell says in his press conference that matter… it’s how traders and markets react to it.

Fed meeting concludes today with policy statement at 2pm ET, and Powell’s press conference starts at 2:30pm ET. Bonds usually will have an initial reaction to the policy statement, which isn’t likely to be a big move today since markets are 99.9% expecting a quarter-point cut. What could help bonds improve at least a little bit though is if the Fed cuts back on its balance sheet selling (quantitative tightening), a possibility that many analysts think is possible and a good idea.

Market Analysis at a higher level:

1. Where mortgage rates stand right now

Mortgage rates are sitting in the low 6s nationally.

The average 30-year fixed rate is around 6.1%–6.3% today for well-qualified borrowers, according to recent national surveys. Freddie Mac’s most recent published average was 6.19% (week of October 23), which was the lowest level in over a year and the third straight weekly decline. That’s down from over 7% earlier this year. AP News+2Nasdaq+2

For context you can say to clients: “Rates have come down roughly a half-point from midsummer, and that’s a meaningful payment difference.”

Why rates fell:

Rates followed the 10-year Treasury yield, which has been trading just under or around 4.00%. The 10-year is now in the ~3.99%–4.01% zone after sliding below 4% in late October as investors bet on weaker growth and more Fed rate cuts. When the 10-year falls, mortgage-backed securities usually improve, and lenders can offer lower mortgage rates. Realtor+3FRED+3Trading Economics+3

Secondary market still supportive:

The Fannie/Freddie 30-year UMBS 5.5% coupon (this is the bond lenders sell your loans into) has been holding in roughly the low 101s, recently closing around 101-10 to 101-13. That tells us liquidity is decent and investors are still paying up for mortgage paper — which helps lenders keep rate sheets relatively steady instead of padding margins “just in case.” Mortgage News Daily

Refis are waking back up:

Refinance activity recently climbed to roughly 56% of total applications, and adjustable-rate mortgage (ARM) demand ticked up as buyers try to optimize payments. Purchase apps dipped week-over-week, but are still running about 20% higher than a year ago. That’s what “early thaw” looks like: people who were paralyzed at 7% are at least running numbers again in the low 6s. MBA+1

Bottom line you can tell a borrower: “No, this isn’t 3%. But it’s the best setup we’ve had in over a year, and you now have leverage you didn’t have six months ago.” AP News+1

2. What the Fed did today (and why that matters for mortgages)

The Fed just cut rates again today.

The Federal Reserve will lower the federal funds rate by 0.25% today, taking the target range down to roughly 3.75%–4.00%. This is the Fed’s second cut this year, after a similar cut in September. The stated goal: support a cooling job market and keep the slowdown from turning into something uglier. FinancialContent+3The Chronicle-Journal+3FinancialContent+3

Here’s how to explain the market analysis without putting people to sleep:

  • The Fed is basically saying, “We’re more worried about jobs now than we are about inflation exploding.”
  • When the Fed signals slower growth ahead, investors tend to buy safer assets like Treasuries.
  • When investors buy Treasuries, yields drop.
  • Lower Treasury yields → better mortgage pricing.

That’s why mortgage rates drifted down into the low 6s in October. Realtor+3FRED+3Trading Economics+3

Important note for clients: The Fed does not directly set 30-year fixed mortgage rates. But the Fed does set expectations. Expectations drive the 10-year Treasury. The 10-year Treasury heavily influences mortgages. That chain is the entire game. FRED+2Yahoo Finance+2

3. Politics is in your rate sheet: shutdown + tariffs

The federal government has been shut down for nearly a month (Day 29).

Congress still hasn’t passed funding, and the Senate has now failed repeatedly to advance a reopening bill. We’re in “missed paychecks, furloughed workers, and certain benefits delayed” territory, plus some federal services (including housing-related programs like flood insurance in certain areas) are strained or paused. CBS News+2Herald News+2

Why you should care as a mortgage pro:

  • A shutdown slows parts of the economy. Slower growth = downward pressure on Treasury yields = helpful for mortgage rates.
  • BUT the shutdown also scrambles the data the Fed and markets normally rely on (payroll data releases have been delayed or revised, for example). When the market can’t “see,” volatility goes up. That means lenders can reprice midday on headlines instead of waiting for scheduled data. CBS News+2Reuters+2

Market Analysis Tariffs and inflation risk are the other political variable.

President Donald Trump’s elevated tariffs on imports have been feeding recession worries (slower growth) and also stoking inflation worries (import costs go up). Markets have been treating those tariffs as a drag on future growth — which pushes yields down — even while acknowledging that higher import prices can keep some inflation pressure alive. Investopedia+1

Translation for clients: Washington is actually pulling rates in two directions at once. The shutdown and slowdown vibe push rates lower. Tariff-related inflation risk pulls rates higher. For now, the “slowdown” story is winning.

4. Housing data this week: is demand really back?

Existing home sales improved.

September existing-home sales rose 1.5% to an annualized pace of 4.06 million, the fastest since February. That’s also up 4.1% from a year ago. Inventory hit about 1.55 million homes, roughly 14% higher than last year, and days-on-market stretched to ~33 days. Median price: about $415,200, which is still up ~2% year-over-year. National Association of REALTORS®+3Reuters+3AP News+3

What that means in plain English:

  • More listings than a year ago.
  • Homes are taking a little longer to sell.
  • Prices are still firm, not crashing.

Pending home sales (today’s release) were flat.

Pending home sales — signed contracts that haven’t closed yet — were unchanged in September vs. August and down 0.9% year-over-year. Regionally, the Northeast and South showed gains while the Midwest and West slipped. Economists expected a small increase, so “flat” says buyers are still cautious. Reuters+2National Association of REALTORS®+2

Why cautious?

Even with rates easing, buyers are still watching job security and affordability. Consumer surveys show people are more nervous about the future job market and overall finances, even as they admit current conditions aren’t terrible. The Conference Board’s Consumer Confidence Index dipped to 94.6 in October (from 95.6), and expectations for the next six months fell to 71.5 — below the level that often signals recession risk. The University of Michigan’s sentiment index is also stuck in the low 50s. ISR+3AP News+3The Conference Board+3

So housing demand is starting to wake up — but it’s stretching, not sprinting. Buyers are rate-sensitive, payment-sensitive, and job-security-sensitive.

That’s exactly what you’d expect at this stage of the cycle.

5. What’s coming in the next 48 hours (and why you care)

Thursday (Oct 30): GDP.

We get the first official read on Q3 GDP tomorrow morning. Markets are watching to see if growth is gliding lower (soft landing) or starting to roll over. Forecasts are for a slower pace than Q2, but still positive growth — not recession. A stronger-than-expected GDP print could nudge Treasury yields up (worse for rates); a softer print could pull them down. bea.gov+2Federal Reserve Bank of Atlanta+2

Friday (Oct 31): PCE inflation.

On Friday we get September PCE — the Fed’s preferred inflation gauge — and, more importantly, “core” PCE (which strips out food and energy). Markets expect about a 0.2% monthly core reading. If inflation looks tame, it reinforces the Fed’s “we can keep easing without losing control” narrative. If it’s sticky, bond traders may worry we’ve cut too soon. bea.gov+2bea.gov+2

Consider this your heads-up for potential midday lender reprices Thursday and Friday. You’ll look like a wizard to agents if you warn them now.

6. Market Analysis: rate outlook (next 2–4 weeks)

Let’s talk possible paths:

Scenario 1: Soft landing (our base case).

  • Fed has now cut twice, and signals it will keep an eye on jobs.
  • GDP shows slower but still positive growth.
  • Core PCE stays in line.
  • The shutdown drags on, keeping mild downward pressure on growth.
  • → The 10-year hangs around ~4%. Mortgage rates stick in the low 6s, and some lenders will market high-5s “with points” headlines going into November. AP News+5The Chronicle-Journal+5FRED+5

Scenario 2: Surprise “we’re still hot.”

  • GDP beats big.
  • Friday’s PCE comes in hotter than expected.
  • Oil or tariff chatter revives inflation fear instead of slowdown fear.
  • → The 10-year could jump back above ~4.1% and rate sheets worsen a couple eighths. This is the “don’t get greedy floating” scenario. Investopedia+2Investing.com+2

Scenario 3: Growth scare / risk-off.

  • Shutdown pain becomes visible (missed paychecks, benefits interruptions, travel delays).
  • Fed Chair Powell leans harder into “protecting employment.”
  • → Investors rush into Treasuries for safety. The 10-year could break below ~3.9%, and lenders may improve pricing — but those improvements can come fast and disappear fast. Herald News+2Wikipedia+2

Right now we’re closest to Scenario 1: gentle slowdown, cautious Fed, buyers tiptoeing back in.

7. How to talk today

  • “Mortgage rates are now hovering in the low 6s, the best levels in over a year, after the Fed cut rates again today to support a cooling job market.” FinancialContent+3The Chronicle-Journal+3AP News+3
  • “Home sales ticked up last month and inventory is improving, but buyers are still cost-conscious and watching job security. That means you actually have negotiating power instead of bidding against 15 offers.” AP News+3Reuters+3AP News+3
  • “The next 48 hours matter: Thursday’s GDP and Friday’s inflation report can move mortgage pricing quickly. If you’re within 30 days of closing, this is not the moment to gamble without a plan.” Investing.com+1

8. Lock / float guidance

If you’re closing in ≤30 days:

Lean lock. You are inside a heavy data window (Fed today, GDP tomorrow, inflation Friday). A hotter-than-expected number could bump rates higher fast and blow up ratios. Better to lock a good number than chase a perfect number. The Chronicle-Journal+2Investing.com+2

If you’re 45–90 days out:

Float, but with guardrails.

Set triggers like:

  • “If the 10-year convincingly pops back above ~4.1%, we lock that day,” or
  • “If lender costs worsen by ~0.25% in rebate, we’re done floating.”
  • This turns ‘rate watching’ into a plan, not a feeling. Trading Economics+2Mortgage News Daily+2

Market Analysis for affordability:

Points matter. In a mostly sideways market like this, buying a small point to drop the note rate by ~0.125%–0.250% can sometimes pencil out faster than hoping the macro drops your rate for free. That’s a controllable lever you can present without forecasting the future

Stay safe and make today great!