Mortgage Rates Continue to Move Upward
Mortgage rates continue to move upward after seeing a downward trend for
much of last week. Nearly all of that improvement has been erased and rates are
now in line with the afternoon following the FOMC Announcement on March 19st.
That leaves today with the second highest rates since January 9th. That leaves
the most prevalently quoted conforming 30yr rate for top-tier scenarios at
4.5%, and fast approaching 4.625%.
Mortgage rates are
most directly informed by Mortgage Backed Securities (MBS), which tend to trade
with a high degree of correlation to US Treasuries. The
stock market did its usual swoon again today, opening strong with the bond and
mortgage markets opened soft this morning with the US Stock market trading
higher. Then Janet Yellen spoke at a
conference in Chicago and treasuries and mortgages improved and some additional
improvement in stocks as a reaction. The
good/bad news is Yellen continued to downplay the strength of the economy and
said the economy still requires plenty of support from the central banker. When
is bad news good news? When the Fed
talks about continued support with low interest rates.
Volatility hurts
mortgage rates every bit as much as falling prices in bond markets (as prices
fall, yields--or interest rates--rise), and more could be in store by the end
of the week. The focal point for the volatility will be Friday morning's
all-important Employment Situation Report. It collides head-on with a rate environment that has been
exceptionally sideways in the bigger picture. In other words, rates may be near
their 2-month highs today, but the range over that time has been 4.375 to 4.5
for the most part. After extended periods of sideways movement in any financial
market, there's more risk that the first departure from the range is bigger
than normal.
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