Mortgage Rate News

Tuesday December 13th is the day many people have been waiting for ever since Thursday November 10th. What do those two days have in common? They each mark the monthly release of the Consumer Price Index, the official inflation data responsible for some of 2022’s wildest trading days. Wild trading days aren’t just for traders.  They have a big impact on mortgage rates, not to mention bigger picture impacts.  For instance, if a wild trading day were to ensue from a higher reading on inflation, it would imply more restrictive policies from the Federal Reserve.  That’s something that can shape entire economic cycles, potentially hastening the recession that some market-watchers expect in 2023. In the case of December 13th, it makes a lot of sense to worry about the implications for Fed policy.  The Fed releases its next statement the very next day!  It’s a near certainty that the Fed will hike rates by 0.50%, a 0.25% decrease from the last hike in early November.  Markets won’t be reacting to that as much as the info the Fed publishes alongside the rate hike. Of specific concern is the proverbial “dot plot.”  This is a reference to the format of the Fed’s forward-looking rate forecasts, published in dot plot format showing each Fed member’s thoughts.  The “dots,” as they’re also called, frequently have the biggest impact on financial markets on the days when they come out (only 4 of the 8 Fed meetings per year).  Read more here: https://www.mortgagenewsdaily.com/markets/mortgage-rates-12102022

Mortgage rates have been remarkably well behaved since the November 10th release of the last Consumer Price Index (CPI), the monthly inflation report that has the biggest impact on the market.  The next CPI comes out next Tuesday.  Much of the time spent between these two reports could be described as an inconsequential waiting game. Today’s rates happened to be a bit higher than yesterday’s, but we’re talking about levels of movement that are only going to matter to borrowers who are actively looking to lock a rate this week.  Even then, the changes won’t be big enough for many borrowers to care. All of that changes next week, or at least it has the most potential to change next week.  The CPI report comes out on Tuesday.  If that’s not enough to cause an extreme reaction in the bond market, the Fed announcement is out the next day and it can also pack a punch. Between now and then, while there are never any guarantees about the future when it comes to financial markets, rates aren’t likely to be anywhere other than the mid-to-low 6% range for top tier conventional 30yr fixed scenarios.

Read more here: https://www.mortgagenewsdaily.com/markets/mortgage-rates-12082022

Mortgage rates moved moderately lower today after new economic data showed a big drop in the cost of labor in Q3.  Labor costs are one of the places the Fed looks for evidence that inflation is becoming entrenched.  In today’s case, the drop suggests additional moderation in the pace of underlying inflationary pressures. The market’s reaction was possibly bigger than it otherwise might have been due to the intense focus on next week’s inflation data on Tuesday and the likely announcement of a smaller rate hike from the Fed the following day.   In short, rampant inflation has been the biggest contributor to the abrupt rate spike in 2022 and the hope is increasing that a shift is about to be confirmed.  Today’s mortgage rates aren’t significantly lower than yesterday’s on average, but it was enough of a movement for the average lender to hit the the lowest levels since early September.  

Read more here: https://www.mortgagenewsdaily.com/markets/mortgage-rates-12072022

This week continues to be a placeholder ahead of more consequential events coming up in the week ahead.  Specifically, next Tuesday and Wednesday’s combination of the Consumer Price Index and the Fed announcement will unequivocally set the tone for rates heading into the end of the year and possibly beyond. Between now and then, there’s not much to be done when it comes to big changes in rates.  Today was another great example as the bonds that underlie the mortgage market traded well inside the range that’s been intact since last Wednesday afternoon.  In fact, today’s trading only occupied a small portion of that range. When markets trade in increasingly narrow ranges, it’s a sign of indecision and anticipation ahead of bigger-ticket events, or at least it can be.  In the current case, it’s highly likely.   Drilling down to nitty gritty detail, we find the average rate was just a bit higher this morning compared to yesterday afternoon, but that can vary by lender depending on the timing and size of yesterday’s rate increases.  In the bigger picture, the average lender is still in the mid 6% range (or just below) for a top tier conventional conforming 30yr fixed scenario.

Read more here: https://www.mortgagenewsdaily.com/markets/mortgage-rates-12062022

The mortgage landscape is very interesting at the moment.  On any given day, some lenders are moving higher, others are moving lower, and the rest are remaining relatively unchanged.  The average lender has been closer to unchanged so far this week but that’s a good thing considering rates are in line with their lowest levels in nearly 2 months.  Earlier this morning, it looked like there could have been some risk to the low rate outlook as the Retail Sales report came out stronger than expected for the month of October.  The bond market briefly lost ground–something that coincides with rates moving higher–but quickly recovered and moved to stronger levels (something that coincides with rates moving lower). All of this volatility played out before mortgage lenders published their first rate sheets of the day.  Modest additional gains in the bond market allowed many lenders to lower rates slightly in the afternoon. In general, lenders have been cautious about adjusting rates as quickly as market movement would allow.  This has enabled them to hold steadier on days where the market should be pushing rates higher, but also makes for less responsiveness on days where bonds should be pushing rates lower. 

Read more here: https://www.mortgagenewsdaily.com/markets/mortgage-rates-11162022

Let’s talk about the current state of mortgage rates.  Before we do, some housekeeping: the following pertains to averages across multiple lenders.  This is an important caveat over the past few days because lenders have adjusted their individual rates by widely varying amounts and in different directions from one another on several occasions.  By the time we add all of the apples into the same batch of apple juice, it tastes remarkably similar to last Thursday afternoon–perhaps slightly sweeter.  In other words, the average lender is roughly in line with (or just barely below) the multi-week lows from Thursday.  You’d have to go back just under 2 months to see anything lower. The average conventional 30yr fixed rate is easily back into the mid 6% range.  Today’s improvements followed more rate-friendly inflation data (it was last week’s consumer inflation data that caused Thursday’s epic drop), in this case, producer-level inflation data via the PPI report.

Read more here: https://www.mortgagenewsdaily.com/markets/mortgage-rates-11152022

If you’re just getting caught up, last Thursday was one for the record books–at least when it comes to the daily records that exist going back to 2009.  No other day has seen as big of a drop in the average 30yr fixed mortgage rate (0.60%). The bonds that dictate mortgage rates lost quite a bit of ground today, but that didn’t translate to any meaningful damage.  This speaks to the ‘uncertainty premium’ that oftentimes prevents lenders from dropping rates as much as the market might suggest at the end of any given week.  It’s usually more noticeable before 3-day weekends, but was easily lost in the shuffle given the scope of the movement. In simpler terms, lenders had to hold something back on Thursday, even though it didn’t look like it at the time.  That may have translated to even lower rates today, had the bond market made gains.  Instead, it allowed lenders to keep rates relatively unchanged even though bonds suggested a move higher. The bigger picture is more promising than it had been, but still dependent on additional data for confirmation.  The worse the economy is doing, the better rates should be able to do, as long as inflation continues to moderate.  

Read more here: https://www.mortgagenewsdaily.com/markets/mortgage-rates-11142022

If you’re just getting caught up, last Thursday was one for the record books–at least when it comes to the daily records that exist going back to 2009.  No other day has seen as big of a drop in the average 30yr fixed mortgage rate (0.60%). The bonds that dictate mortgage rates lost quite a bit of ground today, but that didn’t translate to any meaningful damage.  This speaks to the ‘uncertainty premium’ that oftentimes prevents lenders from dropping rates as much as the market might suggest at the end of any given week.  It’s usually more noticeable before 3-day weekends, but was easily lost in the shuffle given the scope of the movement. In simpler terms, lenders had to hold something back on Thursday, even though it didn’t look like it at the time.  That may have translated to even lower rates today, had the bond market made gains.  Instead, it allowed lenders to keep rates relatively unchanged even though bonds suggested a move higher. The bigger picture is more promising than it had been, but still dependent on additional data for confirmation.  The worse the economy is doing, the better rates should be able to do, as long as inflation continues to moderate.  

Read more here: https://www.mortgagenewsdaily.com/markets/mortgage-rates-11142022

Heading into this week, we knew that Thursday’s Consumer Price Index (CPI) would be critically important. It did not disappoint. CPI is one of two key inflation reports in the US.  PCE (Personal Consumption Expenditures) is the other big index, but because CPI comes out 2 weeks earlier, it gets almost all of the market’s response.   The response to Thursday’s CPI was record setting in at least one important way, and still astonishing in many others.  Let’s talk about why. Why was this week’s CPI so important? First off, almost every CPI report has been important in 2022.  No other economic report has caused more volatility for the bond market.  Because bonds dictate interest rates, we can also say CPI has caused just as much volatility in the mortgage world.  CPI is the king of economic data in 2022 because inflation is the dominant focus of the financial market and the Federal Reserve (aka “the Fed”).  The Fed sets policies intended to keep inflation at a low, stable level.  Runaway inflation causes the Fed to hike interest rates in order to slow down the demand side of the economy.  In the post-pandemic environment where a good amount of inflation is thought to be driven by the SUPPLY side of the economy, that’s resulted in the Fed being particularly aggressive in trying to tamp down demand.

Read more here: https://www.mortgagenewsdaily.com/markets/mortgage-rates-11102022

Mortgage rates experienced one of their calmest days of the past few weeks with the average lender roughly unchanged from yesterday.  Rates are based on bonds, and the underlying bond market has increasingly been hunkering down before a big potential day on Thursday. Why big?  It’s all about CPI. The newest installment of the Consumer Price Index (CPI) will be released at 8:30am on Thursday morning.  This scheduled economic data has had more power than any other economic report to cause volatility in the bond market in 2022.  If inflation remains high or moves higher, rates will likely surge back up to (or above) the 20-year highs seen at the end of October.  If inflation decelerates, rates are likely to move in the other direction. Nothing else on tap for this week has been in the same league as CPI when it comes to rate movement potential.  That is part of the reason the rate market has been less volatile on the first three days of the week: it knows it will likely be making a much bigger move and is just waiting to find out which direction.

Read more here: https://www.mortgagenewsdaily.com/markets/mortgage-rates-11092022

We’re in the middle of a 4 day week culminating in one of the most important events of the year for interest rates.  Thursday morning brings the release of the Consumer Price Index (CPI)–an inflation report that has resulted in bigger market movement than any other economic report this year. Rates have spiked at the fastest pace in 40 years due to inflation and the Federal Reserve’s inflation-fighting policies.  CPI reports have consistently suggested it’s not yet time to back down from those policies.  Each new instance of the data offers the opportunity for that to change (or to be reinforced).   The 3 days of this week before the CPI data can’t possibly hope to compete.  Sure, the news cycle may be focused on mid-term elections, but even the most extreme examples of mid-term related rate volatility pale in comparison to what’s at stake on Thursday.  As such, there’s not much for the bond market to do between now and then.  In the bigger picture, today’s bond market movement amounts to an inconsequential drift. Fortunately, in today’s case, the drift was friendly.  Bonds started the day flat, but improved in the late AM hours before leveling off in the afternoon.  Many mortgage lenders were able to offer modest improvements to the day’s initial rate offerings.  The average lender is still offering conventional 30yr fixed rates over 7% on top tier scenarios, but closer to 7% when compared to yesterday.  Note: in many cases the actual interest rate quoted between today and yesterday would be the same and the improvement would be seen in the form of lower upfront costs.

Read more here: https://www.mortgagenewsdaily.com/markets/mortgage-rates-11082022

Mortgage rates are directly linked to trading levels in the bond market.  When bonds have a bad day, rates tend to rise.  While that was true for the rates associated with US Treasuries (aka “yields,” officially), the mortgage market held its ground more effectively.  Part of the outperformance is surely due to mortgage lenders employing more conservative pricing strategies last Friday.  But even then, mortgage-specific bonds outperformed Treasuries as well.  This has to do with Treasuries facing a few more hurdles this week.  Said hurdles are associated with various forms of “supply” where higher supply means lower prices and lower prices mean higher yields/rates all other things being equal.  That’s a bit esoteric for our purposes, so suffice it to say mortgage-backed bonds had a better day than other bonds, and mortgage lenders had a bit of room to improve regardless of the bond market.  Those factors allowed the average lender to offer just slightly lower rates versus last Friday, but the improvement is small enough that the average borrower would only see it in the form of lower upfront costs. Despite today’s modest victory, stakes remain exceptionally high by the end of the week.  The Consumer Price Index (CPI) comes out on Thursday and no other report has had as much power to cause volatility for rates in 2022.

Read more here: https://www.mortgagenewsdaily.com/markets/mortgage-rates-11072022

If you missed yesterday’s explanation of the Fed’s impact on mortgage rates, it’s worth a read (assuming you’d like to understand the Fed’s impact on mortgage rates!).   Mortgage Rates Move Higher After Fed Rate Hike, But Not Because of It Today was more of an afterthought in terms of the domestic news cycle, but the underlying bond market continued losing ground (when bonds lose ground, rates rise, all other things being equal) as the rest of the world got caught up with the reaction to the Fed. Economic data was mixed, but none of it weak enough to suggest any change in the Fed’s higher rate outlook.  Additionally, tomorrow’s jobs report carries big market movement potential, so bond buyers could be relatively more cautious until the results are out at 8:30am ET. In conjunction with yesterday’s market weakness, today was enough to make for a reasonably big up increase in the prevailing rate.  The average lender is getting close to the recent 20yr highs from a few weeks ago when the average conventional 30yr fixed rate was 7.37% (7.30% today up from 7.09% just 2 days ago).

Read more here: https://www.mortgagenewsdaily.com/markets/mortgage-rates-11032022

The Federal Reserve hiked rates by 0.75% today and 30yr fixed mortgage rates moved moderately higher.  Interestingly enough, those two things are fairly unrelated.   The Fed Funds Rate (the thing the Fed “hikes” when you hear about the Fed hiking rates) applies to overnight loans among large financial institutions.  It’s important, to be sure, but it only changes 8 times a year whereas securities in the bond market change every second of the day.   There are all kinds of bonds.  US Treasuries are the quintessential example.  The yield on a 10yr US Treasury is the most popular benchmark for longer-term interest rates in the world.  There are bonds that underlie the mortgage market as well (MBS or mortgage-backed-securities).  They tend to move a lot like US Treasuries.  There are even bonds that traders use to bet on the future level of the Fed Funds Rate. With that in mind, the bond market has LONG since assumed the Fed would hike 0.75% today and when the 0.75% hike actually happened, it didn’t have any impact on the rest of the bond market.  In fact, Treasuries and MBS actually IMPROVED at first. The improvements were due to a change in the verbiage of the Fed’s policy statement.  Traders were hoping to get some indication that the Fed was getting close to having a discussion about slowing the pace of rate hikes.  While it was very carefully worded, today’s announcement arguably provided such a hint.  Unfortunately, that wasn’t the last thing the Fed had to say today.

Read more here: https://www.mortgagenewsdaily.com/markets/mortgage-rates-11022022

Mortgage rates moved slightly lower today after spending the past two trading days moving higher.  The average lender remains in the low 7% range for top tier conventional 30yr fixed scenarios. The back and forth consolidation of the past few days speaks to the broader financial market finding its seats before tomorrow’s big show.  At 2pm ET, we’ll get the latest policy update from the Fed.  What’s at stake? We already know the Fed will hike rates by 0.75%.  Markets have already moved into position for that and when it happens, it won’t be a reason for any movement in rates.  So why would we even care about Fed day? In addition to the rate hike itself, the Fed writes several paragraphs in an official statement.  The text of the statement is scrutinized for clues or outright promises about the path of policy changes in the future.  30 minutes after the announcement, Fed Chair Powell holds a press conference that allows him to comment on the same topics. It’s these verbiage changes and Q&A clarifications that the market is interested in.  Even small changes in the Fed’s rate hike outlook (again, not for tomorrow, but for subsequent meetings) can have a big impact on rate movement in the short term. There is a lot of expectation surrounding this meeting for the Fed to signal that it’s getting close to being done with rate hikes.  If they go so far as to throw that bone to the market, it would likely be good for rates at first.  If they completely shy away from it (or worse… take the opportunity to remind the market that rates can still go quite a bit higher if inflation doesn’t fall into line), rates are going to have a bad afternoon tomorrow.  Either way, volatility risk is high.

Read more here: https://www.mortgagenewsdaily.com/markets/mortgage-rates-11012022

Mortgage rates are fresh off their best week since at least July and their best winning streak (in terms of consecutive days moving lower) in well over a year.  The price of admission happened to be the highest rates in more than 20 years, so the recent improvements were really nothing more than a balancing act.  The past 2 trading days (Friday and today) have helped reinforce that message.  In other words the underlying bond market (which dictates mortgage rates) was simply de-escalating from a more panicked state as opposed to embarking on a new trend toward lower rates.  Any new trend toward lower rates will depend upon inflation and economic data.  To a lesser extent, Fed policy changes can shape trends, but ultimately, if Fed policy is well understood to be a function of inflation and the economy, then we’re right back to watching the data.  The only time the Fed shapes trends in a more noticeable way is when their policy outlook is evolving or changing.  Some market participants think the Fed is close to making a slight course correction that acknowledges economic headwinds.  If this turns out to be the case, we could get some indication of that on Wednesday when the Fed releases the latest policy announcement. To be sure, the Fed will still be hiking its policy rate by 0.75%.  Markets know this and rates have already taken their lumps accordingly.  What markets don’t know is whether Fed Chair Powell is ready to discuss the potential changes in the rate hike trajectory in the next 2 meetings or even give any indication that the Fed feels like it’s getting close to the ceiling for rates.  If we know Powell, he’ll be sure to say “it depends on the data.”

Read more here: https://www.mortgagenewsdaily.com/markets/mortgage-rates-10312022

Mortgage rates moved lower for an impressive 4th straight day.  That hasn’t happened since late July, but there are a few caveats.  First off, while the streak may be the longest in a few months, it’s not the biggest.  Rates fell at a faster pace at the end of September, but in a slightly more volatile pattern.   The bigger catch, perhaps, is that rates had achieved fresh 20 year highs just before the current winning streak began, and it’s not that uncommon to see some stronger improvement immediately following big spikes to long-term highs. All of the above having been said, the gains are far from insignificant.  The average lender is roughly 0.375% lower from last Thursday in terms of the “note rate” (the rate that actually applies to a mortgage as opposed to the “effective rate” or APR which factors in upfront costs).  Effective rates have been a bit of a moving target due to pricing challenges presented by illiquidity in the underlying bond market. Big words, but here’s the gist: during more normal times, lenders are able to sell mortgages at a premium (meaning an investor might pay something like $410k for a $400k loan and earn their profits over time by collecting interest on a rate that would be comparatively higher than a non-premium scenario).  Premium pricing requires a good amount of volume of loans in a certain rate range and good amount of stability.  We have neither in 2022.  The bonds that make premium pricing possible are in their infancy–not a high volume, liquid market.  There’s also been a ton of volatility.  For both those reasons, investors haven’t been eager to pay the premium for loans with the comparatively higher rates.  

Read more here: https://www.mortgagenewsdaily.com/markets/mortgage-rates-10262022

Yesterday, we noted that the 2nd consecutive day of improvement for mortgage rates was a rare accomplishment in the context of the past few months.  Now today, the winning streak is extended to 3 days making it a bit of unicorn and begging the question: are things changing? In some ways, things are changing.  We’re witnessing a bond market that is starting to question whether or not rates have already done enough to prepare for the likely path of the Fed Funds Rate in the future.  To be clear, the Fed Funds Rate doesn’t directly dictate mortgage rates, but the expectations for Fed hikes correlate closely with longer-term rates. In other words, since last Friday, traders/analysts/pundits/etc are increasingly wondering if the Fed will do something to signal a leveling-off in the pace of monetary policy tightening (aka the stuff that pushes rates higher, among other things) at next week’s Fed meeting.  That wondering is expressed in the form of bond market resilience which, in turn, puts downward pressure on rates. Be aware that much of the room for improvement in rates comes courtesy of all of the damage done so far.  3 short days ago, mortgage rates were easily up to new 20 year highs and they haven’t fallen very far from those levels just yet.  The current rally is better viewed as the market’s way of  consolidating ahead of more relevant information as opposed to reversing course and heading blindly lower until further notice.  The relevant info will mostly arrive next week in the form of economic data and the Fed announcement, but there is a smattering of lower-importance events during the second half of this week.

Read more here: https://www.mortgagenewsdaily.com/markets/mortgage-rates-10252022

Now here’s a rare thing! Mortgage rates managed to move lower, on average, for the 2nd consecutive business day on Monday.  That hasn’t happened for roughly 3 weeks, and you’d need to go back another 3 weeks to see the previous example.  So that’s the first caveat: these winning streaks have been few and far between.  The second caveat is that winning streaks have been punctuated by much larger losing streaks.  The one that ended last Thursday brought rates easily to their highest levels in more than 20 years. If you’ve enjoyed those last two counterpoints, let’s make it three.  Each of the past 2 “wins” has been fairly small–almost insignificant in the big picture.  The average lender is still over 7.25% for top tier conventional 30yr fixed scenarios.  Additionally, the improvements have been seen largely in the form of lower upfront costs (i.e. the “note rate” on most loan quotes is the same as it was at the recent highs.  It just may costs slightly less to get it). Rates depend on bonds and bonds are in a bad mood due to inflation and Fed policy.  We continue waiting for economic data to make a case for a shift in inflation and, consequently, upward rate momentum.  While some of this week’s data could cause some volatility, we’ll be waiting until next week to hear from the Fed (they’re on communications lockdown until next Wednesday) and until next Friday to get a look at the big jobs report.  In addition to lower inflation, any drift toward higher levels of unemployment would also promote a softer stance from the Fed.

Read more here: https://www.mortgagenewsdaily.com/markets/mortgage-rates-10242022

There’s no way to sugarcoat the situation in the bond market and, by extension, the mortgage and housing markets. Rates have risen at a nearly unprecedented pace, ushering in one of the quickest cooldowns on record. One of the only ways to find hope in this environment is to imagine that bad news is finite. To be clear, “bad news” is relative, because it has been the resilience of the domestic economy that has allowed rates to rise as aggressively as they have so far.  This isn’t necessarily a direct relationship, but the Fed is looking for a few pieces of evidence that its unfriendly policies are having the desired effect, and one of those pieces would be rising unemployment.   So far, unemployment has remained low, inflation has remained high, and the Fed has remained very unfriendly toward rates.  They’ve been so unfriendly that market participants have increasingly wondered how much they can get away with before signs of uncommon stress show up in rate markets and elsewhere. We may have witnessed some of that stress this week–especially in the second half which saw longer-term rates surge higher without any obvious provocation.  At this point, we should distinguish between longer term rates (like 10yr Treasury yields or mortgages) and shorter term rates (like a 2yr Treasury or the Fed Funds Rate).  Differences in the behavior between long and short term rates can offer clues about market psychology. In the 2nd half of the week short term yields moved higher, faster at first.  When shorter-term yields are rising faster in 2022, it often goes hand in hand with the perception that the Fed will be hiking its Fed Funds Rate faster.  To illustrate this point, here’s a quick look at the relative movement in 2yr Treasury yields and Fed Funds Rate predictions for September 2023.

Read more here: https://www.mortgagenewsdaily.com/markets/mortgage-rates-10222022