Mortgage Rate News

Mortgage rates hit their highest level in 2 weeks heading into Christmas weekend. The average lender raised costs by a very small amount again on Monday, thus leaving them within striking distance of 3 week highs. Now today, there's been a slight recover as the bond market (which dictates mortgage rate movement) gave a clearer impression that it had leveled off for the time being. All of the above having been said, the most relevant consideration is the very small gap between 3 week highs and 3 week lows. In fact, rate changes have been limited to adjustments in closing costs for many weeks in some cases. That's lenders' way of making finer adjustments to the cost of borrower (due to the fact that markets rarely move enough to necessitate a change in the typical interest rate increment of 0

Mortgage rates continued higher for the third straight day on Wednesday. This brings the average lender to the highest levels in exactly 2 weeks. But that's the most dramatic way to represent the facts. While it's true that rates are at 2 week highs, they're not too far away from 2 week lows. In fact, many borrowers would be seeing the same "note rate" at the top of today's loan quotes as any other day in the past 2 weeks. Indeed, the same could be said for the past 2 months in many cases. If note rates are unchanged, why are we talking about "higher rates?" In short: upfront costs! Whether it's a positive or negative value, mortgages have an associated cost that allows for smaller adjustments than the typical 0.125% interest rate increments. For example, a 3.25% note rate with $1400 in lender

For most lenders, mortgage rates edged slightly higher at the start of the holiday-shortened week. The exception would be among those lenders who made changes to their rate offerings on Friday afternoon in response to deteriorating market conditions. The unequivocal comparison would be with Friday morning's rates, in which case today's rates are higher. All that having been said, the movement is minimal in the bigger picture, and the average lender remains in the lower half of the range seen over the past few months. There were no significant events to cause any serious volatility in the bond market. Bonds are the key ingredient in day-to-day rate movement and they're generally waiting for omicron-related pandemic uncertainty to clear up. Looking ahead, the bond market will be closed on Friday

Mortgage rates were fairly flat heading into today's important Fed announcement. Despite arguably receiving bad news, they didn't move too much higher by the end of the day. What was the bad news? In short, the Fed is doubling the pace of "tapering." That means it will be reducing the amount of bonds it has been buying twice as quickly. Those bond purchases are generally associated with lower rates although the financial market tends to move well in advance of this type of policy change because the Fed tends to telegraph it quite well. Indeed, if there's one reason that rates didn't freak out today, that would be it. The writing has been on the wall for more than 2 weeks now. The movement in rates was small enough that the average borrower will still be seeing the same rate quotes as yesterday

Traditionally, financial markets have been interested in announcements from the Federal Reserve due to the Fed's policy rate (the Fed Funds Rate) and the line of thinking that might inform its future movement. Since 2009, things have changed . With the Fed engaged in large scale bond buying more often than not, it's the status of those bond buying programs that are of primary interest. The Fed's fund rate still matters, but only when there's a surprising and tangible change to the outlook. With that in mind, tomorrow's Fed announcement may bring such a change. There are two reasons for this. First , the Fed will most likely announce a faster wind-down of its bond buying programs. The targeted end date for bond buying will tacitly suggest the time frame in which the Fed is thinking about hiking

Mortgage rates have been fairly flat in the bigger picture, but each passing day continues to bring small scale movements. This is almost always the case, even if rate quotes don't seem to be changing. One key reason for this is the difference between "note rate" and "effective rate." The former is the rate that actually applies to the principal balance of a mortgage. The latter takes upfront costs into consideration as they are technically increasing the interest paid on money borrowed. Effective rates are easier to change than note rates because note rates are typically offered in .125% increments. It would take a big day of movement in the bond market to prompt a 0.125% change in rate. Upfront costs, on the other hand, can change in much smaller increments. So instead of .125%, a lender

Financial market volatility increased noticeably after the emergence of the omicron variant. Last week, that proved to be good for rates and bad for stocks. This week was a different story. While the collective view of omicron remains cautious, several high profile comments pushed back against the defensive reaction seen in the previous week. Stocks eagerly bounced back toward pre-omicron levels and bonds reluctantly followed. If anything, the half-hearted move in the bond market is encouraging for rates. It speaks to a certain level of demand in the marketplace in light of other headwinds. Several of those headwinds have already been resolved this week. They included things like the scheduled Treasury auction cycle, elevated corporate bond issuance, and the release of the CPI (consumer price

Mortgage rates stabilized yesterday after moving higher on the first 2 days of the week. They managed to improve modestly today despite some volatility surrounding a scheduled auction of 30yr Treasury bonds. Mortgage rates are based primarily on mortgage-backed-securities or MBS (bonds that tend to correlate with US Treasuries). As such, drama in Treasuries often spills over to mortgage rates. Fortunately, Treasury traders were able to take today's weak auction results in stride. The bond market weakened temporarily , but quickly returned to the slightly stronger levels from morning hours. This allowed mortgage lenders to hold rate sheets steady at slightly lower levels than yesterday. All that having been said, the average lender is still not back in line with last week's rates. This depends

Mortgage rates stabilized today after spending the past 2 days moving modestly higher. In general, rates moved almost exclusively lower last week in response to concerns over the omicron variant. With several news stories acting to temper those concerns, the current week has essentially been a push back in the other direction. US Treasuries are a bellwether for general momentum in the bond market. Mortgage rates are based on mortgage-specific bonds that can behave slightly differently. All that to say that Treasuries have had a tougher time than mortgages this week, thus serving to limit the rise in rates over the past 2 days. Case in point, Treasury yields are higher again today, but mortgage-backed bonds are currently flat. As such, the average lender is still offering rates that are very

Mortgage rates moved higher again today thus keeping them well within the sideways range that's been in place for the past 2 months. Omicron-related news continues having an impact on the bond market. At first, uncertainty surrounding the new variant drove demand for bonds. Higher demand means higher prices and lower yields (aka "rates"). This week, the theme has been different . While plenty of uncertainty remains, there are more headlines regarding "lower severity" of covid symptoms in omicron cases. Investors have rushed back into the stock market as a result, and bonds have suffered. Fortunately, the bonds that specifically underlie mortgages have taken less damage than US Treasuries--largely because they didn't experience as much benefit last week. Nonetheless, rates are modestly higher

Several developments are converging on the global economy and financial markets at the moment. Each brings its own causes for concern. Together, they bring a significant increase in volatility. Should we be worried about Omicron? Answering such questions is beyond the scope of this newsletter. What we can say is that the financial market is clearly asking itself this question and the effects are obvious. Stocks had been flat in the weeks leading up to omicron and bonds had been moving higher in yield. Post-omicron and they've entered into a familiar risk-aversion pattern marked by lower stock prices and bond yields. The same "risk-off" vibes are apparent in other assets as well. Covid may not be the only consideration for oil prices, but it did give them a push. Lower oil prices don't dictate

Mortgage rates were much lower at the start of business yesterday , but began rising in the afternoon as the bond market lost ground. That same momentum continued in the overnight trading session. By the time mortgage lenders were setting rates this morning, bonds had deteriorated enough for a noticeable bump toward higher rates. This was especially noticeable for lenders who didn't change rates in the middle of the day yesterday. By the early afternoon, bonds were recovering as financial markets reacted to news of the first omicron case in the US. That sort of news fuels what's known as a flight to safety in the market. This generally means weakness in stocks and strength in bonds. When bonds improve, rates fall , all other things being equal. The net effect was a return to Monday's levels

Mortgage rates ended the previous week with a hopeful outlook due to the omicron variant. In general, rates benefit from news and events that cause investors to seek protection from risk. A fresh dose of risk aversion was served up overnight as Moderna's CEO said he expected vaccine efficacy to be lower against the new variant. Those headlines sent stock prices and bond yields lower. When bond yields are lower, lenders are typically able to offer lower mortgage rates, all other things being equal. Indeed, today's initial rate sheets showed strong improvements from yesterday. The average lender was offering the lowest rates in nearly 3 weeks. But things changed around 11am. In a congressional testimony, Fed Chair Powell's comments on inflation and bond buying pushed the bond market back in the

Just when it looked like the current week would fizzle out on a negative note for rates, our least favorite market mover is back in the news. B.1.1.529 (designated now as "Omicron"), a new covid variant hit the market like a ton of bricks on Friday morning. 48 hours earlier, Google had never heard of it. Search interest began to ramp up on Thanksgiving Day. By Friday, it's an utterly pervasive headline. With financial markets closed for Thanksgiving, there was an abrupt reaction upon reopening for the half-day on Friday. This augmented other moves that were already in progress, like the recent decline in oil prices and the outperformance of European bonds. Both are positive indicators for US rates as long as they keep doing what they're doing. Some of the recent economic data, such as the Consumer

Mortgage rates continued higher today as the bond market remained in a defensive stance for a variety of reasons. The week's scheduled Treasury auctions were among those reasons, but rates remained under pressure even after today's final auction. That means traders are still nervous about upcoming events. With markets closed on Thursday and effectively closed on Friday, the focus is on tomorrow by default. The morning's biggest potential source of volatility will be the PCE inflation data at 10am ET. Then in the afternoon, the Fed releases the minutes from its most recent meeting. There is some speculation that the minutes will include a more robust discussion about hiking rates in 2022--something that hadn't really been on the radar until recently. Today's bond market movement pushed rates

Mortgage rates began the new week on a bad note with the average lender full erasing the improvement seen on Friday. This leaves many lenders at their highest levels since April, but in those cases, it should be noted that today's rates are extremely close to those seen in late October. In other words, we're essentially back in line with the highest levels in more than 7 months. In outright terms, the average lender was closer to 3.125% on a top tier conventional 30yr fixed scenario. Today, they'd be closer to 3.25% . The rate spike was driven by bond market weakness. This will almost always be the case for any rate spike as rates are primarily determined by the bond market. Bonds were reacting to a combination of challenges. The first was the re-nomination of Jerome Powell as the Chair of

Mortgage rates finally caught a break after spending the past six business days moving higher at a faster-than-normal pace. During that time, the average lender's conventional 30yr fixed rates increased by 0.125-0.25%, depending on the loan scenario. That's a big move for just over a week, even though it leaves the going rate in the low 3% range. Today's improvement came courtesy of behind-the-scenes developments in the bond market. In a way, mortgage rates had been caught in the crossfire this week as many companies issued new corporate debt. That issuance process creates volatility for the bond market, and thus, mortgage rates. The saving grace is that some of the upward pressure on rates that can occur early in the issuance process is often reversed when the corporate bonds are ultimately

Mortgage rates continued higher again today, despite a fairly flat performance in the bond market. Specifically, the mortgage-backed securities (MBS) that directly influence mortgage rates were almost perfectly flat on the day. Normally, this would suggest very little change to the average lender's rates. Unfortunately, the average lender still had to get caught up with yesterday's market losses. As such, rates were higher right out of the gate this morning--the highest in more than 3 weeks. Today's damage might not have been as noticeable had it not been for this morning's economic data. The Census Bureau reported October's Retail Sales rose by 1.7%, making it the strongest month in several years apart from the months associated with the bulk of covid stimulus payments. In general, strong

After hitting the lowest levels in over a month last Tuesday, mortgage rates have been moving higher fairly quickly each day since then. Most of the damage occurred on Wednesday and Friday of last week (markets were closed on Thursday), but today got progressively worse as the hours ticked by. Mortgage lenders prefer to release one set of rates per day. If the market moves enough, they will typically recall those offerings and " reprice " for better or worse. At the start of business today, the average lender's rates were actually fairly close to last Friday's, but intraday weakness in the bond market forced widespread reprices ("for the worse," in case that part wasn't implied clearly enough). In the bigger picture, today's rates are the highest in about 2 weeks , but the movement during that

Several sources for mortgage rate data are doing consumers a major disservice this week. At least two of them are claiming that the average top tier 30yr fixed rate is still under 3.00%. It's not. One disclaimer right up front: different companies have different rate-quoting policies. Even within the same company, borrowers can typically opt for different combinations of rates and fees. Sometimes two rates that seem very different are actually very similar. Still, none of those subtleties would get the average lender under 3.00% this week--especially not by Friday. Let's focus on the specific example of Freddie Mac's weekly rate survey which showed 30yr fixed rates at 2.98% 2 short days ago. We've discussed the downsides of this methodology before. Specifically , Freddie collects responses