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Weekly Recap: The Ten-Year Fell, the Auctions Were Strong, and the Mortgage Still Went to 7.40%

By Steve Waller · October 11, 2026

Weekly Recap: The Ten-Year Fell, the Auctions Were Strong, and the Mortgage Still Went to 7.40%

The ten-year Treasury closed Friday at 5.24% against 5.28% a week earlier, and Treasury sold a ten-year note at 5.300% on Wednesday with a 2.77 bid-to-cover. Freddie Mac's thirty-year went up anyway, 7.28% to 7.40% and a seventh straight weekly increase, which widened the spread over the benchmark from 204 to 218 basis points in five sessions. On HAR's $330,000 Houston median that twelve basis points takes about $3,900 of reachable price out of your exit buyer - in a week when the bond market rallied.

The week in one sentence

The benchmark fell, the auctions were strong, and your exit buyer's mortgage went up twelve basis points anyway.

Here is the ten-year Treasury session by session from the Treasury's own daily par yield curve: 5.31% Monday, 5.27% Tuesday, 5.28% Wednesday, 5.22% Thursday, 5.24% Friday. It closed the previous Friday at 5.28%. Monday's 5.31% is the highest daily print of 2026. The thirty-year Treasury finished at 5.60% against 5.63% a week earlier, and the two-year at 4.80% against 4.83%. The gap between the two-year and the ten-year is essentially unchanged at 44 basis points against 45.

So the whole curve came down a little and did not change shape. Over the same five sessions Freddie Mac's thirty-year survey went from 7.28% to 7.40%. That is the part of this week worth understanding, because it is the first week in two months where the thing that moved against the borrower was not the benchmark.

Treasury sold a lot of paper and it went well

Last Sunday's brief named Wednesday and Thursday as the week's risk: a soft ten-year or thirty-year auction at these levels would push the mortgage higher. The auctions were not soft.

The ten-year yield fell nine basis points over Wednesday and Thursday on the back of that demand. The mortgage went up anyway. If you were waiting for a reason, the reason is the spread.

The spread between the mortgage and the benchmark widened 14 basis points

A thirty-year mortgage is priced off the ten-year Treasury plus a margin for prepayment risk, servicing and the appetite of whoever buys the mortgage-backed security. That margin is not fixed, and this week it moved more than the benchmark did.

Fourteen basis points of widening in one week, on a benchmark that was two basis points lower. The fifteen-year went 6.60% to 6.73% over the same week. A year ago the same survey read 6.30% and 5.53%. It was the seventh straight weekly increase in the thirty-year.

The practical consequence: watching the ten-year is no longer enough to know what your exit buyer can borrow. For two months the two moved together, and a rising benchmark explained everything. This week it did not.

The Fed's own staff wrote this down three weeks ago

Wednesday brought the minutes of the 15-16 September meeting, where the Committee raised the target range a quarter point to 3.75 to 4.00 percent on a unanimous 12-0 vote. Two passages matter to anyone underwriting an exit.

First, the staff's own read on financing: home-purchase borrowing remained depressed, financing was somewhat restrictive for residential mortgage borrowers, and mortgage rates had risen a bit more than ten-year Treasury yields. That is the spread, named by the people who set the short rate, three weeks before this week proved it again. A few participants said financial conditions did not look supportive of housing activity.

Second, the forward look: most participants assessed that another increase would likely be appropriate by year end, while stressing that the decision depends on incoming data. Market and survey measures of medium and longer-term inflation expectations were still consistent with the 2 percent objective, but several participants flagged elevated short-term expectations, and some worried that more than five years of above-target inflation could start to move wage and price setting.

The next meeting is 27-28 October. The incoming data those participants referred to is Wednesday's CPI.

Services prices hit a four-year high

Monday's ISM services report for September held the headline at 54.9% from 55.4%, a twenty-seventh consecutive month of expansion. The number that matters is underneath it: the Prices Index went to 74.0% from 72.6%, which ISM reports as the highest reading since July 2022.

That is the second price index in two weeks to break out - manufacturing's went to 77.9% the week before. Respondents named fuel and tariffs as the dominant pressures, with diesel, gasoline and petroleum products all rising, and memory products and copper with them. New orders eased to 59.8% from 60.9% and business activity dropped to 56.5% from 61.7%, while employment crossed back into expansion at 50.1% from 47.8%.

One detail worth keeping if you are budgeting a rehab: lumber was one of only two commodities ISM's panel reported falling in price.

What 7.40% costs the buyer you are selling to

The arithmetic on HAR's August Houston median of $330,000, twenty percent down, thirty-year amortising:

Twelve basis points is a small number and $3,900 is not, and that asymmetry is the whole argument for pricing the exit off today's curve rather than the one you comped on. On ATTOM's second-quarter reading the typical Houston flip grossed 3.7%, which on a $330,000 exit is $12,210. This week took roughly a third of that off what your buyer can reach.

The hold side got cheaper. The flip side got dearer.

This is the first divergence of the autumn and it is worth noticing, because the two exits point in opposite directions for the first time since August.

A DSCR takeout prices off the long end. The ten-year fell four basis points this week, which on a $262,500 refinance loan is about $7 a month, or $85 a year, of coverage handed back. Trivial in isolation. But the ten-year is still up 45 basis points since 1 September, when it stood at 4.79%, so one week of relief does not undo the quarter.

On the income side of that same rental, nothing has moved at all. HAR's most recent rental update has Houston's average single-family rent at $2,412 against $2,414 a year earlier. Rent has given you two dollars less than nothing to absorb forty-five basis points with.

What held still, and what is simply not published yet

No fresh Houston data landed this week, and it is worth being plain about which numbers in your underwrite are therefore a month old.

The week ahead

A short week with one event in it. There are no coupon auctions at all - the Treasury calendar is bills only until the twenty-year reopening on 21 October - so the long end will move on data rather than supply.

How to work this week

Sources

Market data is from public sources and is provided for information only. Nothing here is an offer of credit, a rate quote, or investment advice. Financing is subject to underwriting, lender approval, appraisal or valuation, title, insurance, property eligibility and program availability.

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