Mortgage Markets in “Wobble Mode”: What the Latest Data Is Telling Us

Speeds were mixed once again this month; conventional fixed and jumbos increased while governments dropped. The opposite of last month. We seem to be in wobble mode. Mortgage rates were down a bit month to month.

The average coupon of all loans outstanding in this database ($5.8T) is 4.30% and 82% of all mortgages have coupons under 6.00%. However, four dynamics have appeared:

1. Some borrowers are tiring of hanging on to their low-rate mortgages and succumbing to demographic pressures (new home, job transfer, etc.) to refi
2. Cash-out refis seem to be growing in popularity, with approximately 12% of all new loans falling into this category
3. 1/6th of the outstanding loans are now close to or “in the money” (i.e. ≥ 6.0%)
4. Rates are low relative to the last year.

The wild card now is where rates go from here. War was declared on Iran on February 28th, and rates have risen a bit since then. It is unclear, as of yet, what impact this, in combination with other uncertainties, will have on longer term rates.

Taken together, these trends suggest a mortgage market that is adjusting to shifting economic and geopolitical conditions. Borrower behavior is beginning to evolve as demographic pressures and equity access influence refinancing decisions, while interest rate uncertainty continues to shape market expectations. As the year progresses, the direction of rates will likely remain a key driver of mortgage activity and portfolio performance.