Mortgage Rate Watch


    The Top Still Isn't In For Mortgage Rates

    Mortgage rates had another rough day as they continued moving up into new 4-year highs.  Unlike the extremely mild and uneventful day-to-day changes seen for most of the past 2 months, rates are actually putting some distance between themselves and the March plateau. 

    Whereas a well-qualified borrower with 25% down may have been quoted a conventional 30yr fixed rate of 4.5% a few weeks ago, they'd already be looking at 4.75% today for most lenders.  Of course this can vary a bit from lender to lender, but the point is that all lenders have experienced that sort of delta.

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    Mortgage Rates Push Farther Into 4-Year Highs

    Mortgage rates moved somewhat higher again today, thus pushing them farther into the highest levels in more than 4 years. This isn't the result of anything that happened today, but rather an ongoing process whereby the bond market (which underlies rates) is coming to terms with big-picture, long-term headwinds mentioned in the bullet points at the bottom of this article.  

    Whereas rates had leveled off and even improved somewhat during March and early April, they've quickly shown more volatile colors.  Borrowers are definitely seeing rates that are an eighth of a point higher from last week and, in many cases, a quarter of a percentage point higher than 2018's best levels.  

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    NOW Mortgage Rates Are at 4-Year Highs

    Mortgage rates moved markedly higher today, officially leaving them at new 4-year highs.  The only other time they've earned that distinction this year was in February--NOT last week as all the major surveys claimed.  To be clear, they were certainly close last week, but the surveys didn't account for some of the worst individual days in February.  Does any of this really matter?  No, not so much.  Here's what matters:

    The average lender is quoting very well-qualified borrowers with huge downpayments something north of 4.5% on conventional 30yr fixed mortgages today.  Let's call it 4.625%.  Up until Friday, that number hadn't been over 4.5% except for on a few of those ill-fated February days. 

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    Mortgage Rates Quickly Approaching 4-Year Highs

    Let's clear one thing up before we begin.  Freddie Mac, MBA, and Ellie Mae all noted new 4-year highs in mortgage rates this week.  They are all technically wrong.  This has to do with the way their data is collected and/or averaged.  And while I have no doubt that they are accurately conveying the results of their data collection efforts according to their methodology, there is a more accurate way to do things.  Specifically, we can track actual lenders' rate sheets every day. 

    Even if we take an average of that daily data, we still find that rates aren't quite back to 4-year highs just yet.  Depending on the lender, these occurred on one of the days near the end of February.  In fact, some lenders' rates from March 21st are still higher than today's.  Are we talking about very big differences between now and then?  Not at all!  But if we're going to talk about rates hitting 4-year highs, we might as well be precise about it.

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    Mortgage Rates Jump to Highest Levels in About a Month

    Mortgage rates jumped higher today as bonds continued a move away from narrow Springtime range seen in March and early April.  Bonds dictate rate movement and yesterday saw the bond market make its first convincing attempt to break what had been a friendly, narrow range.  This of course coincided with a narrow range for rates in the past few months.  It was also "friendly" relative to the trajectory seen in the first part of the year.

    When these sorts of ranges become established, the boundaries take on a special significance.  As soon as the floor or the ceiling is definitively broken, there tends to be some additional momentum in the direction of the break.  That's why yesterday's headline mentioned that bonds were suggesting "more trouble ahead."  I'd hoped to be wrong about that, but...

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    Mortgage Rates Inch Higher as Bonds Suggest More Trouble Ahead

    Mortgage rates moved higher today as bond markets continued a mildly weaker trend for the month of April.  Bonds (which underlie rates) are under pressure for a variety of reasons.  The most notable headwinds are longer-term and bigger-picture.  Rates responded to these headwinds in a fairly big way in Jan/Feb and have basically been "taking a break" since then.

    Rates have moved very little during this "break," with most borrowers being quoted the same NOTE rate on any given day in the past 2 months.  Upfront costs have been the only way the modulate the EFFECTIVE rate of the average lender's 30yr fixed quote.

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    Modest Improvements For Mortgage Rates

    Mortgage rates had a calm day.  Lenders who had offered improved rate sheets yesterday afternoon didn't see much reason to drop rates any further today.  Lenders who took a more conservative route yesterday ended up being a little better off.  Although there were several economic reports this morning, bonds (which drive rates) did nothing to respond and have generally been uninspired so far this week. 

    In fact, in a broader sense, bonds haven't exhibited much inspiration for more than a month.  Although rates have descended modestly since late February, it's just as fair to label that movement as "flat" in the context of typical rate movement.  For example, most borrowers would still be quoted the same "note rate," with the only difference being slight changes in upfront fees/points.  

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    Mortgage Rates Back to Unchanged After Starting Higher

    Mortgage rates began the day at higher levels, as bond markets lost ground overnight.  Bonds dictate rates, and "losing ground" means bond prices are falling.  When bond prices fall, rates move higher.

    There's some chatter in the marketplace about developments in Syria being the motivation for every little move in bonds/rates.  Rather, it's more accurate to say it's ONE OF the motivations behind SOME of the moves.  Bonds had a few other concerns overnight.  That's why they were able to improve during domestic hours even though nothing changed with respect to Syria.

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    Mortgage Rates Rise Despite Market Improvement

    Mortgage rates were slightly higher for most lenders today even though underlying bond markets suggested the opposite.  This is partly a timing issue.  Yesterday saw bond markets weaken throughout the day.  Weaker bonds imply higher rates.  After a certain amount of weakness, mortgage lenders will adjust rates and re-issue new rate sheets (aka a "negative reprice").  Many lenders did this yesterday, but not all of them.  Even among the group that repriced, most of them did so earlier in the afternoon and bonds continued to weaken through the end of the day.

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    Mortgage Rates Bounce Back

    A day after hitting the lowest levels in more than 2 months, mortgage rates bounced back up today.  The good news is that they didn't land too far from yesterday's levels in the grand scheme of things, and are still technically closer to the bottom of their March/April range. 

    Part of today's reversal had to do with the fact that bonds are caught up in market movements that follow geopolitical risk.  Specifically, to whatever extent some sort of military confrontation with Syria and Russia looked imminent yesterday, rates benefited because some investors were seeking safe havens in the bond market.  Excess demand for bonds pushes rates lower.  When Trump pushed back on that notion overnight, the safe haven trade went the other way.  

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    Mortgage Rates Inch Down to 2-Month Lows

    Mortgage rates technically hit the lowest levels in 2 months today.  The catch is that they were already pretty close and that today's improvement wasn't necessarily that big.  In fact, most borrowers will see the same interest rate in today's quotes with the only difference being a slight adjustment in upfront costs/credits. 

    We'd been waiting somewhat eagerly for today's Consumer Price Index (CPI)--a key inflation report with a consistent track record (at least in the past year) of causing movement for rates.  When CPI is stronger than expected, rates tend to rise.  When it's weaker, rates fall--all other things being equal.  Today's CPI came out largely in line with expectations.  The important "Core" number showed annual inflation right in line with the 2.1% forecast.

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    Mortgage Rates Still Sideways Ahead of Key Inflation Data

    Mortgage rates were roughly unchanged again today.  Some lenders were slightly higher in rate, but not enough to affect the average.  Underlying bond markets (which dictate rates) have been eerily calm so far this week, ostensibly with an eye on tomorrow morning's big inflation report.   As we discussed yesterday, this is one of the biggest potential motivations for rates in terms of economic data.  If inflation comes in much higher than expected, rates should also move higher.  Vice versa if inflation comes in weaker.

     

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    Mortgage Rates Mostly Steady, but Volatility Could Increase

    Mortgage rates were steady to slightly higher to begin the new week, depending on the lender.  Even in cases where rates rose, the increase was modest at best.  The lack of drama is consistent with the week's economic calendar which essentially had nothing meaningful on tap today.

    Wednesday, by comparison, has much higher stakes.  In the morning, The Department of Labor will release the most widely-followed report on inflation, The Consumer Price Index (CPI).  This data, released once a month, has been one of the biggest sources of inspiration for rates over the past year. 

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    Mortgage Rates Near 2-Month Lows After Jobs Report

    Mortgage rates moved back down to yesterday's levels after a much weaker read on job creation from the Labor Department.  In general, weak economic data tends to push investors away from stocks and toward safer-haven assets like bonds.  Excess bond-buying demand causes bond prices to rise and rates to fall. 

    The only catch with today's jobs report reaction is that movement in the bonds that specifically underlie mortgages was a bit smaller than in the broader bond market.  For instance, the price of 10yr US Treasuries rose more than twice as much as the price of the most common mortgage-backed-security (MBS).  In addition to lagging MBS, mortgage lenders haven't been keen on making big changes to their rate sheet offerings.  As a result, rates are better today, but for some lenders, it's just as accurate to say "unchanged." 

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    Mortgage Rates Edge Higher Ahead of Jobs Report

    Mortgage rates moved slightly higher today as trade war fears waned for financial markets.  There's not a direct connection between trade issues and mortgage rates, but like any prominent financial news, there are usually only a few degrees of separation. 

    In the current case, stocks had moved quickly lower in recent weeks as the trade war potential increased.  That weakness ultimately threatened to push stocks below early February's "crash" levels.  Investors assumed that additional weakness would follow if that line in the sand is crossed.  With that in mind, the bond market got in position to soak up some of the panic money fleeing from the stock market.  When there is extra demand for bonds, bond prices rise and interest rates fall--all other things being equal.  From there, the bonds that underlie mortgage rates are another degree removed, and then lenders' utilization of those bond prices in deriving a final rate sheet is yet another degree beyond that.

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