Mortgage Reports

Mortgage Rates Newsletter - Market Analysis

Daily Mortgage Rates Update Archive Description

Over the past 30 days, interest rates have risen sharply . This is true for both mortgage rates and bond market benchmarks like 10yr Treasury yields. But another version of the 10yr Treasury yield continues to operate near all-time lows . How can rates simultaneously be rising quickly but still near all-time lows? Inflation! As we discussed last week, inflation erodes the value of bonds. As such, bond yields frequently move in response to changes in inflation expectations (higher inflation = higher rates). That correlation is easily seen in the following chart: Obviously, something changed in 2020. But what changed specifically for bonds and inflation? For starters, the Federal Reserve immediately began buying massive amounts of bonds shortly after the pandemic began. This acted to keep yields
Posted: October 22, 2021, 8:44 pm
Mortgage rates haven't really been able to catch a break recently. This week is shaping up to be one of the worst since March. Since then, only 2 other weeks have been worse and they both occurred in the past month. In and of itself, today's jump in rates wouldn't be too troubling, but when added to the existing momentum, the losses are adding up. A conventional 30yr fixed scenario that had carried rates in the 2.75-2.875 neighborhood a month ago is now closer 3.125-3.25%. Making matters more frustrating is the fact that there really isn't any great, short-term explanation for the incremental damage. Negative momentum is simply embedded, and it has been since the Fed signaled its intent to taper its bond purchases on September 22nd. Around the same time, covid case counts began turning a corner
Posted: October 21, 2021, 8:22 pm
Mortgage rates hit their highest levels in months yesterday as bonds lost ground at a brisk pace to start the new week. Bonds--specifically mortgage-backed securities (MBS)--are the most important ingredient used by lenders to determine mortgage rates. Bond market weakness (i.e. "losing ground") means that bond PRICES are falling. Bond prices vary inversely with bond yields, and yield is just a fancy term for "rate." In simpler terms, bond sellers had to offer higher rates of return to attract reluctant buyers. But why are bonds struggling? This is actually a general trend for bonds and rates for just over a year as the economy battles back against covid. The middle of 2021 was a bit of an aberration as the delta variant brought new pandemic-related uncertainty to financial markets. But now
Posted: October 19, 2021, 8:29 pm
Mortgage rates had a mixed showing last week. They started out high before improving through Thursday. Finally, they took a step back up on Friday. Now at the start of the new week, the upward momentum is continuing. The bond market was much weaker in overnight trading, and weaker bonds mean higher rates, all other things being equal. Bonds hit their weakest levels just before the average mortgage lender released rates for the day. As such, the average conventional 30yr fixed rate quote was the highest in roughly 4 months . As the day progressed, bonds found their footing to some extent. It was enough for most lenders to offer mid-day improvements to rates. Keep in mind though, these improvements are generally small. They mean today's rates are lower than they were this morning, but still noticeably
Posted: October 18, 2021, 8:21 pm
After a calm summer at historic lows, interest rate volatility has ramped up heading into the fall. What are rates worried about, and is this just the beginning of more drama? In a word: maybe! Because they're based on bonds, rates are always worried about anything that can have a big impact on the supply/demand equation in the bond market. Since March 2020, virtually any major supply/demand consideration can be traced back to the pandemic in some way. In general, the worse the outlook is for covid, the higher the outlook is for rates. Rates have other concerns too. Inflation is a constant consideration for bonds/rates because bonds are repaid on a fixed schedule that cannot adjust for inflation over time. If investors think inflation will move higher, they would demand higher and higher rates
Posted: October 15, 2021, 11:47 pm