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 long time prodding a record number of consecutive all-time lows, but it's fair to hold out some hope of reprieve nonetheless. Even if we assume the best possible economic outcomes in the months and years ahead, February's pace feels a bit overdone....(read more)
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....(read more)
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...
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....(read more)
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).