|Mortgage Rates Surge to 6-Month Highs
January 12, 2018
Mortgage rates surged to 6-month highs on Tuesday and then held fairly steady from there. Although several convenient headlines were offered up by financial media to explain the move, it was simply the result of pent-up momentum that had been corralled into a sideways range at the end of 2017.
We’ve not been shy about saying we expected a bigger break higher or lower in rates at the start of 2018 and this was that break. The only question is whether we’ve seen rates move high enough to attract more support from investors (the more people who want to buy debt at these levels, the easier it will be for rates to form a ceiling here).
For now, it makes more sense to remain defensive with respect to locking and floating. In other words, floating is too risky for all but the biggest gamblers even though we may be seeing early signs of support.
-Matt Graham, Mortgage News Daily
30 Year Fixed Rate Mortgage
Week in Review
Rates shown below are based on the 30 Year Fixed Rate Mortgage
Friday, January 5, 2018 : 4.06% (-0.01%)
Mortgage rates moved lower following a weaker-than-expected jobs report. The so-called “jobs report” (officially “The Employment Situation”) is–on average and over time–the most important piece of economic data on any given month. While it has recently taken a back seat to the likes of the Consumer Price Index (CPI… an inflation report), it always has the power to move bond markets. Bonds, in turn, move mortgage rates.
More detail: “Mortgage Rates Better at First, Following Weaker Jobs Numbers”
Monday, January 8, 2018 : 4.09% (+0.03%)
Mortgage rates rose today, largely due to bond market movement from the end of last week that never made it onto last week’s rate sheets. Specifically, the bond markets that underlie mortgage rate movement had a fairly bad day last Friday, but not until after most lenders already released their first rate sheets of the day.
More detail: “Mortgage Rates Back Near Recent Highs”
Tuesday, January 9, 2018 : 4.14% (+0.05%)
Mortgage rates rose again today, adding to a nasty 2-day streak that’s taken the average 30 yr fixed rate an eighth of a point higher. That’s an uncommonly big 2-day move, and it brings rates to their highest levels since early July 2017. Of potentially more concern is the fact that the current rate spike is making an ominous suggestion about the broader trend. Specifically, the last 3 months of 2017 saw rates consolidate in a mostly-sideways pattern. We’d been waiting for a bigger break higher or lower. Although there were some early warning signs that the breakout would be to the upside, this week has all but confirmed it. The implication is for things to get worse before they get better.
More detail: “Mortgage Rates Highest in 6 Months”
Wednesday, January 10, 2018 : 4.15% (+0.01%)
Mortgage rates were much higher this morning, bringing them to new 6-month highs (a dubious distinction also accomplished yesterday). Unlike yesterday, there were good and bad moments today. Bond markets (which underlie rate movement) were already starting to show signs of support this morning. Early this afternoon, a scheduled auction of 10yr Treasury Notes was met with strong demand. When demand for a bond rises relative to supply, rates fall.
More detail: “Mortgage Rates Remain at 6-Month Highs Despite Late Day Bounce”
Thursday, January 11, 2018 : 4.14% (-0.01%)
Mortgage rates caught a break today, moving lower for the first time this week and pushing back from the highest levels since early July 2017. Like yesterday, strong demand at a Treasury auction helped US bond markets, but notably, only the longer-term maturities (10yr and 30yr bonds were the big winners). Fortunately, the bonds that underlie mortgage rates tend to correlate well with longer-term Treasuries.
More detail: “Mortgage Rates Catch a Break With Help From Treasuries”
Friday, January 12, 2018 : 4.15% (+0.01%)
Mortgage rates caught a break yesterday by moving lower for the first time this week. They arguably caught a break again today by not moving any higher than they did. Underlying bond markets (which drive mortgage rate changes) were rocked this morning by stronger inflation data. The important Consumer Price Index (CPI) was expected to hold steady at the same low levels that have persisted since the middle of 2017. The modest uptick in inflation sent bond yields higher and resulted in most mortgage lenders putting out noticeably higher rates this morning.
More detail: “Mortgage Rates Avoid More Dire Outcomes After Inflation Report”