Mortgage Rate News

There are a few interesting developments for mortgage rates today--especially in light of last week's striking discrepancy between Freddie's weekly survey and the reality on the front lines. Specifically, the Freddie survey finally did a bit more to catch up with reality as it conveyed one the biggest recent jumps to the highest levels reported since early last summer. At the same time, actual rates were having their best week of the year and their first winning week since January 24th. Fast forward to the new week and we may be setting up for a mirror image of last week. In other words, rates were probably low enough yesterday for most of Freddie's survey responses to indicate a decent week-over-week drop when results are released on Thursday. Contrast that to the reality on the street which

The biggest story for the mortgage and housing market so far in 2021 has been the big spike in mortgage rates. It has been more abrupt and covered more ground than all but the worst historical examples. That said, it was always going to happen when the covid outlook improved. For something that was "always going to happen," the rate spike still managed to catch many people off guard. The biggest reason for that was the disconnect between mortgage rates and the bonds that typically dictate mortgage rate movement. There are actually two types of bonds that affect mortgage rates: Treasuries in a general sense, and mortgage-backed bonds specifically. To make a long story short, the pandemic resulted in an unprecedented breakdown in the normal correlations between bonds and rates. The simplest way

It's no secret that 2021 has been a rough year for mortgage rates so far. They've moved higher on all but a few weeks, and exclusively higher if we only count the past 8 weeks (something that hasn't happened in more than a decade , even though there are a few instances of bigger moves overall). In fact, it was that record-tying streak of "bad weeks" that served as the foundation for hope heading into the current week (as discussed here on Monday). In other words, rates have had such a bad run that they were increasingly due to catch a break. Granted, we still have another day to get through, but as of today, this week is very much on track to break the cycle. Yes, rates are LOWER --not just today, but versus the end of last week as well. That's an assertion that runs counter to most media coverage

Mortgage rates put in their 3rd decent performance of the week today amid relatively calm conditions in the underlying bond market. These sorts of winning streaks have been in short supply in 2021--especially since February. Lender pricing was also fairly conservative by the middle of last week as rates moved up to another long-term high. The steady improvement over the past 3 days brings the average lender back in line with rates from Friday, March 12th, and while these aren't big moves in the grand scheme of things, they're better than the recent alternative. To reiterate yesterday's point on the path ahead, much remains to be seen as to whether this is the start of a broader reversal for rates or just another in a long line of false starts. Eventually, one of these friendly bounces will

Mortgage rates moved lower at a decent pace today for the 2nd day in a row. The average lender is still offering the same "note rate" compared to yesterday, but the costs associated with that rate are lower. In other words, "effective rates" (a synthetic rate that accounts for changes in upfront costs, thus allowing us to observe smaller day-to-day changes in the form of an interest rate) are lower. Why distinguish between effective rates and note rates? Simply put, note rates don't tend to move enough to be worth tracking each day (most lenders offer rates in 0.125% increments). During more stable market conditions, we can go weeks or even months at a time without a change in note rates. Effective rates, however, are almost always higher or lower by at least 0.01%. So where does this leave

Today ended up being fairly uneventful for mortgage rates --a welcome reprieve in the context of recent volatility. Actually, "volatility" is putting it mildly. 2021 has been a total rout for longer-term rates, even if 30yr fixed mortgages in the low-to-mid 3% range are historically excellent. That "historical context" argument is good perspective for the casual observer, but precious little consolation to a prospective borrower that saw rates of 2.75% a few months ago and believed the hype that they'd keep going lower. Borrowers seeking loans for investment properties and 2nd homes are finding an increasing supply of drama as recent regulatory efforts have resulted in a majority of lenders making big adjustments to the costs of those loans. In the worst cases, it can cost you more than 7 additional

Despite your thoughts on the term "fake news," we have to talk about it in the context of mortgage rates . It's highly pertinent, even if deception is far from the intention. Thursday is a big day for mortgage rate news because that's when Freddie Mac's weekly mortgage rate survey is published. Why does that matter? Because, while any given lender can do a fine job of tracking their own rates over time, Freddie is one of the only games in town when it comes to capturing a broad average rate offering among multiple lenders. It doesn't hurt that their numbers go back to the 70's and that they're one of the two gigantic housing agencies that see a vast majority of all mortgages in the US move across their desks in some capacity. Over time, reporters have found it easy to simply cover mortgage

Mortgage rates started the day in bad shape after significant bond market weakness overnight. Treasury yields rose roughly 0.05%, and that sort of move typically coincides with mortgage rates rising nearly as much. Today wasn't much of an exception. The average lender started out with effective 30yr fixed rates roughly 0.03-0.04% higher than yesterday, which means they were the highest in a year! Note: when we reference higher "effective rates," it usually means that the costs associated with yesterday's rates have moved as opposed to the rate itself. Those upfront costs provide more of a fine-tuning adjustment. Today's big to-do was the policy announcement from the Fed--not so much because of any expected policy changes, but rather due to the potential extension of a temporary rule that allowed

Mortgage rates rose moderately today, depending on the lender. It's worth noting that lender pricing is exceptionally widely stratified at the moment. In other words, some lenders made big moves today while others did not. Disparity between lenders is nothing new, but the point is that it's been elevated and persistently volatile. This began after the pandemic hit financial markets a year ago this month, but it has ramped up in the past week or so as lenders contend with new restrictions handed down from regulators (via Fannie and Freddie, collectively "the agencies"). Those restrictions limit the amount of certain types of loans that can receive the agencies' stamp of approval. Lenders who were over the limit had to raise rates on those loans abruptly in order to bring their ratios back down

Rising rate headlines are nothing new, but there was a bit of a double whammy this week... or triple, depending on your point of view. Whammy 1: Highest Rates in a Year It's March 2021, and you'd now have to go back to March 2020 to see higher mortgage rates. It will take mainstream media a while to get caught up with this new reality because the most widely cited mortgage rate survey tends to lag behind sharp moves like this. Whammy 2: It's Been a Bumpy Ride And that brings us to "whammy 2." This move has been surprisingly abrupt. Not only have rates risen about as fast as they ever do over the past 2 months, there have also been several false starts where it looked like rates were catching a break only to jump much higher in a single day. Friday was one of those days. The first 4 days of

Mortgage rates improved microscopically today as the underlying bond market stayed uncharacteristically steady. Since the beginning of 2021, bonds have been exceptionally volatile with yields moving higher and prices moving lower. That's a recipe for higher interest rates--something that was painfully obvious in February when the average mortgage lender jumped by half a percentage point in conventional 30yr fixed rates. March saw rates move just a bit higher at first, but they've since leveled off --at least for now. The current week hasn't done anything to jeopardize that stability so far, and that's a welcome change of pace from almost every other week this year. The big question is whether rates are truly leveling-off for an extended period of time or merely pausing for a few days or weeks

At this point, no one should be surprised to hear that mortgage rates have moved significantly higher in 2021--especially in the past few weeks. There are several reasons for this, but the easiest way to make sense of it all is to say "rates were ultra low when covid was at its worst and they've been rising as covid-related risks have been receding." To be sure, there are many other contributing factors, but most of them can be linked right back to the covid narrative. Taking the big, scary rate spike as read, let's move on to wondering about what happens next . All too often in the past 2-3 weeks, there's been a glimmer of hope in the bond market (which dictates day-to-day mortgage rate changes) only for things to get even worse in short order. We've reached another one of those "glimmer of

Interest rates can't seem to catch a break. February was one of only a handful of months in the past 2 decades that resulted in a 0.50% mortgage rate spike. Despite hopes to the contrary, March isn't off to a great start either. Paradoxically, this rate drama means everything is going according to plan. Why is that? Because the "plan," in this case, is to win the war on the pandemic. That's a multi-faceted issue, of course, and the war is far from over. But most of the battles have deleterious effects on rates when they're going well. At the most basic level, as covid recedes, the economy improves and a strong economy is the quintessential inspiration for rising rates. Inflation is a closely related concept to general economic growth because more "demand" in the economy results in higher prices

Mortgage rates jumped quickly today after Q&A session with Federal Reserve Chair Jerome Powell. What did he say to cause such drama? Actually, it's more about what he didn't say. For some reason, market participants were expecting (or at least hoping) that Powell would say something to address the recent run-up in longer term rates. Some commentary went so far as to suggest the Fed would suddenly have a change of heart about a tweak to its bond buying program that it just went to some effort to distance itself from in recent months. The tweak in question is most widely known as "operation twist. " It consists of the Fed selling some of its shorter maturity bonds and replacing them with longer maturities. The net effect is downward pressure on longer-term rates like mortgages and 10yr Treasury

In the past 2 decades , there have been 6 months where mortgage rates rose at least 50 basis points. February 2021 was one of them. Moreover, it was one of only 2 of those months where rates rose without obvious provocation from a significant new, unexpected motivation (the last time that happened was December 2010. The other months were associated with 2013's taper tantrum, the 2016 presidential election, and the market dislocations in March 2020 as covid panic surged). In other words, it was a really bad month for rates--so bad, in fact, that it has increasingly made sense to look for some relief simply because things don't tend to stay that bad for that long. Of course, if there's an exception to how rapidly rates "usually" spike, it has every right to occur after rates have spent an unusually

Rising rates have been on the menu for months, but the drama kicked into a higher gear this week. Maybe you heard about this? We've certainly been discussing it in recent newsletters ( especially last week's ). The rising rate narrative hit the mainstream this week as it was widely credited for doing damage to the stock market. Perhaps you even caught one of Thursday's many mortgage rate headlines citing the spike in Freddie Mac's weekly mortgage rate survey. Freddie reported a jump in 30yr fixed rates from 2.81 to 2.97, their biggest in nearly a year. Unfortunately, Freddie was low last week and they're WAY low this week. This is a common problem when things are this volatile. Although their survey is published on Thursdays, most of the responses are in by Monday. As such, their numbers didn

Mortgage rates WISH they were still at 2.97%--the number conveyed today by Freddie Mac's weekly survey. Freddie's data is accurate when it comes to capturing broad trends over time, but can really fall short when the bond market is experiencing elevated volatility. To say that bond market volatility has been elevated recently is an understatement of extreme proportions. Things are happening that haven't happened in years . Some measures of volatility rival the March 2020 panic surrounding covid, only this time, there's no catalyst other than the market movement itself. Today was by far the worst of the bunch when it comes to this most recent spate of volatility. Most any mortgage lender added another eighth of a percent to their 30yr fixed rate offerings. Over the course of the past week, most

As of today, you'd have to go back to June 2020 to see higher mortgage rates. This is courtesy of an ongoing move in the bond market that has longer-term rates/yields surging higher at the quickest pace since the pandemic began. The broader bond market has actually been signalling this sort of move since late last summer, but it wasn't an issue for mortgage rates for a variety of reasons. Now that the mortgage market has mostly exhausted its protective cushion against broader bond market volatility, when the broader bond market has a bad day, so do we. It goes without saying that today was bad. Just look at the scoreboard , after all. But it also tried to be good. Bonds battled back from their worst levels quite well by the early afternoon. This was especially true for mortgage-backed bonds

There are still 4 business days left in the month of February and thus still 4 days for the bond market to undergo an epic recovery that helps mortgage rates come back down. But traders and market-watchers alike have pined for--if not outright expected--such a recovery several times in the past few weeks only to be disappointed . Merely avoiding additional rate spikes would be a victory at this point. Even if we can manage to avoid further rate spikes, February will still go down as the worst month for rates since January 2018 (March 2020 was worse at face value, but it's not really a fair comparison due to the unprecedented bond market reaction to the pandemic). Some back-of-the-napkin math (OK, it's actually more official than that) shows the average lender charging at least a quarter of

There's no precedent for the winning streak enjoyed by mortgage rates in the 2nd half of 2020. We've never seen so many new record lows in the same year, and we never spent as much time at those lows (not even close). All of the above makes it easy to get lulled into a false sense of low-rate security, but it's time to wake up. Actually, the alarm has been going off for a while now. Previous posts pointed out the disconnect between the bond market and mortgage rates on multiple occasions in 2020. Near the end of the year, we warned against complacency in no unspecific terms . Following the Georgia senate election, we've been tracking a surge in bond market volatility based on the expectation that it would increasingly spill over to the mortgage rate world. ( Read More: 1/8/21: Have We Seen