Good morning on this best day of the week Wednesday from your Hometown Lender,
Yesterday, minimal data allowed mortgage bonds to stay flat through the day.
Today, rates are improving a bit after a weak start. The durable goods data from December was released this morning and was down from November but not as much as was expected. If you remove transportation equipment, it was up on the month.
The only other item to note on the calendar today is the minutes from the Fed’s last meeting, which comes out at 11 am. Most of what will be shared has already been said so I don’t expect much of a big deal with the release.
With being unable to break through the line of resistance (lower rates), the bias is toward locking.
Market Analysis – from a higher view:
Market Analysis – Quick Snapshot
- 10-year Treasury: ~4.06–4.08% this morning (still hovering near the psychological 4.00% line).
- Fed funds rate: 3.50%–3.75% (held steady at the last meeting; minutes due 11:00 a.m. PT / 2:00 p.m. ET today).
- Inflation (latest CPI – January 2026):
- Headline: +0.2% MoM (SA) | +2.4% YoY
- Core: +0.3% MoM (SA) | +2.5% YoY
- Mortgage rates (national ballpark): still a low-6s world
- Freddie Mac (weekly): 6.09% (as of Feb 12)
- Bankrate (daily survey): ~6.19% today
1) Market Analysis – What Hit This Morning (CPI-style breakdown)
Today wasn’t CPI day—but we got housing + capex data that matters for growth expectations (and therefore rate sentiment).
A) Housing Starts / Permits (Dec 2025 report)
- Housing starts: +15.8% MoM to 1.499M (SAAR)
- Building permits: +0.7% MoM to 1.483M (SAAR)
- Completions: +9.8% MoM to 1.520M
B) Durable Goods / Business Investment (Dec 2025 report)
- Durable goods orders: +0.8% (headline)
- Core capital goods (nondefense ex-aircraft): +0.3% (a cleaner read on business investment)
Narrative you can use (simple + useful):
“Today’s data says the economy is still moving—housing is showing real momentum and business spending isn’t rolling over. That’s good for growth, but it keeps the Fed comfortable being patient, which is why rates are improving slowly, not collapsing.”
2) Fed Watch
- Markets are still leaning toward no change at the next meeting; cuts are more of a mid-year story unless inflation re-accelerates or jobs crack.
- Today’s catalyst:FOMC minutes (Jan meeting) at 11:00 a.m. PT / 2:00 p.m. ET. Expect the market to scan for:
- “How high is the bar for cuts?”
- “How worried are they about services inflation staying sticky?”
3) Market Analysis – Where Mortgage Rates Actually Are
Reality check: consumers hear “rates are down” and assume “5s everywhere.” We’re not there yet.
- 30-yr fixed (top-tier borrowers): generally ~6.0%–6.3% depending on points/LLPAs/loan size/occupancy/credit.
- Weekly trend: Freddie Mac is down sharply vs. a year ago (6.09% now vs. 6.87% last year).
- Translation: Affordability is improving at the margin, but the win is strategy (structure, buydowns, seller credits, smart lock timing), not wishful thinking.
4) Housing Market Check
Today’s housing report adds an important nuance:
- Builders are still building (starts jumped), and completions are up—that helps inventory in a market that’s been supply-starved.
- Single-family permits were softer in the details, which hints builders are still cautious about demand being rate-sensitive.
- Net: more supply help, but demand remains payment-driven.
5) Market Analysis – Political Backdrop & Fed Independence
This is the part markets pretend not to watch… and then absolutely watch.
- Kevin Warsh was nominated to be the next Fed Chair (pending confirmation), with Powell’s chair term ending in May 2026.
- At the same time, the Lisa Cook removal fight (and broader Fed independence questions) is still in the air, with real “institutional risk premium” implications for bonds.
- Why it matters for rates: if markets smell “less independence,” they can demand a little extra yield (higher long rates)… unless the uncertainty triggers risk-off buying (lower yields). Welcome to modern macro: two opposing forces, both caffeinated.
6) What This All Means for Rates Going Forward (three-scenario grid)
| Scenario | What happens | Rate impact |
| Base case (most likely) | Inflation cools gradually; Fed stays patient; cuts start mid-year | Slow grind lower (not a waterfall) |
| Better for rates | Inflation falls faster / growth cools; minutes sound dovish | Sharper rally → more 5-handle sightings in pockets |
| Worse for rates | Services inflation re-heats or politics lifts term premium | Choppy / sideways-to-higher |
7) Practical Takeaways
- For buyers: the “win” is often negotiating power + financing structure (credits, temporary buydowns, ARM strategy where appropriate), not waiting for a magical headline rate.
- For sellers/listings: “rates easing” supports demand at the margin—pair it with pricing discipline and a payment-focused marketing angle.
- For agents: use today’s housing print to support: “Supply is improving, not flooding—good homes still move.”
8) Lock vs Float
If you’re shopping or 60+ days out, float can make sense—but only if you’re comfortable with volatility and have a clear “bailout level.”
If you’re in contract with a close in the next 15–30 days, the market is still headline-sensitive (minutes + inflation path). I lean lock with a plan (and watch for renegotiation opportunities if we get a rally).
Stay safe and make today great!