Mortgage Rate Watch
Rates Started Higher, But Recovered by The Afternoon
There has been a lot of volatility in the bond market recently.  Because bonds drive interest rate changes, that's meant plenty of volatility in the mortgage market as well.  The month of May has been less universally awful compared to March and April, one of the worse 2-month stretches in the modern history of rates.  But in transitioning from "awful" to "something else," mortgage lenders are scrambling to set rates at the right levels. Yesterday saw the bond market swoon all day.  By the end of the day, some mortgage lenders had pulled back (i.e. raised rates) by quite a bit.  Others waited until this morning.  Either way, this morning's rates were distinctly higher than those seen over the past 3 business days. As the day progressed, an extremely big drop in the stock market sent investors seeking safer havens in the bond market.  Excess demand for bonds pushes bond prices higher.  When bond prices rise, yields (another word for "rates") fall.  By the end of the day, most lenders had re-issued rates at lower levels, more closely aligned with those seen last Friday. This doesn't change the fact that rates are still in the mid 5% range, depending on the scenario.  They're just slightly lower than they were yesterday afternoon or this morning.
Mortgage Rates Moving Back Up
Mortgage rates moved higher today at the fastest pace in 2 weeks.  Part of the reason the size of the jump was the fact that rates have done quite well since hitting the last major high early last week.  In other words, there was a bit of a rebound effect. The average lender made it down to the 5.25%-5.375% neighborhood as of last week when it comes to top tier conventional 30yr fixed rates.  As of this afternoon, they're back in the 5.375%-5.5% zone--possibly higher due to late day weakness in the bond market. Bonds (which dictate rates) took extra damage today from a stronger than expected Retail Sales report.  The headline sales growth of 0.9% was actually in line with expectations, but the previous month was revised significantly higher and some other components of the data suggested consumers were far less worried about inflation than some sentiment surveys would suggest.  
Mortgage Rates Unchanged to Slightly Lower
Mortgage rates are coming off of one of their best weeks in nearly 2 years, which isn't quite as glamorous as it sounds, but still a good accomplishment (read more about it in last week's recap HERE ).  Rates managed to maintain those levels as the new week began.  Some lenders were microscopically better, but not enough to have a noticeable impact on most quotes.   The bond market (which dictates rates) is finally shifting into a more indecisive phase after multiple decisive defeats throughout 2022.  Those defeats pushed rates higher at the fastest pace since the early 80s primarily due to inflation and the Federal Reserve's increasingly austere efforts to control it.  The Fed is only just beginning to embark on their policy tightening campaign (relative to their intended destination), but rates themselves may already be most of the way to the finish line. The ultimate location of that finish line will depend on how inflation evolves from here and the global economic fallout from tighter policy (not to mention the higher costs).  In the past 2 weeks, investors have been more vocal in considering that economic fallout.  At the same time, there have been some signs that inflation is beginning to decelerate--both good things for rates . But don't expect rates to tumble precipitously.  The best way to think about what's happening right now is that a more balanced, uncertain outlook is taking the place of a frenzied dash to push rates higher as quickly as possible without stopping to consider any counterpoints.  That means the base case is for sideways volatility, at best.  Thankfully, that's a big upgrade relative the what we've seen so far in 2022.
Best Week For Rates in Almost 2 Years, But There's a Catch
Mortgage rates have moved higher at the fastest pace in decades so far in 2022, but this week proved to be a refreshing exception.  To understand why, we first need to examine the relationship between stocks and bonds, which is a bit more variable than most people assume.  Conventional wisdom holds that stock prices and bond yields correlate with each other.  This makes good logical sense from the standpoint of selling one to buy the other.  For instance, if you sold bonds to buy stocks, bond yields and stock prices would both move higher together.  While we often see this correlation over short time frames, the longer term trends tend to be quite different. To make matters more confusing, despite the INVERSE relationship over the longer run, there are definitely pockets of time where investors are moving money out of stocks, into bonds, and vice versa.  This week hasn't been flawless in that regard, but it has generally seen more of that conventional wisdom type of movement.   As the highlighted portions of the chart point out, we can see examples of conventional wisdom and the opposite sort of movement in close proximity to one another. In other words, sometimes the orange and blue lines quickly moved in opposite directions despite mostly following each other.  Generally speaking, one of the most common reasons to see stocks and bonds jump in opposite directions is Fed policy.  Even though the Fed conducts monetary policy in the bond market, when the Fed's policies are looser, the entire market tends to benefit.  Conversely, when the Fed shifts toward a tighter policy stance--as has been the case on multiple occasions over the past 6 months, both stocks and bonds tend to suffer.
Rates Are Actually Lower Today (And This Week)
Multiple headlines are citing higher mortgage rates today.  Even if you read past those headlines, you'd still be left with the impression that this week's rates are higher than last week's.  Unfortunately (or perhaps, fortunately , in this case), all of the above would be incorrect. Rates are actually lower today and significantly lower than last week.  In fact, as long as they're still ending the business week on Fridays, this week's rates are significantly lower, with the average lender offering conventional 30yr fixed rates about a quarter of a point below those seen on Friday afternoon. You'd have to go all the way back to April 27th to see anything as low. So what's with the misinformation in the aforementioned headlines?  It's not intentional .  It's a byproduct of the news media's penchant to quote the weekly Freddie Mac survey.  The survey tends to be stale by the time it is ultimately released.  That usually doesn't cause an issue, but when rates are volatile, the survey can be quite different from reality.  Today is just another one of those days in what has been an exceptionally volatile 2022.  The average lender is now quoting conventional 30yr fixed rates at 5.375% or lower for top tier scenarios.  This is down from 5.625% at the recent highs just a few days ago.  
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