Wednesday was far less eventful than the first two days of the week as far as mortgage rates were concerned. The average lender raised rates just a hair, but apart from yesterday, these are the lowest levels in a month and very close to the lowest levels in more than 3 years. Bond markets and mortgage lenders will be closed tomorrow for Thanksgiving. While Friday is technically open, 9 times out of 10, it may as well not be. In other words, the Friday after Thanksgiving rarely sees any meaningful movement in mortgage rates or the underlying bond market.  

Mortgage rates moved nicely lower on Tuesday with the average lender very close to the 2025 lows seen in late October. These levels are effectively right in line with the lowest since late 2022. If today's drop seems abrupt, that's because it is. In fact, it's a bigger drop than the underlying bond market justifies. There's a reason for this and we covered it in detail back in September: Why Rates Seem to Drop More Quickly as They Approach Certain Thresholds. Rather than credit any of the recent underlying events, the improvement in rates/bonds has more to do with idiosyncratic trading conditions that are often seen on major holiday weeks. That said, some of today's data and events contributed. These include another week reading in weekly employment numbers from ADP as well as a reaction to rumors that rate-friendly Kevin Hassett will be the next Fed Chair. [thirtyyearmortgagerates]

Thanksgiving weeks can be weird for mortgage rates. This has to do with the fact that rates are dictated by the bond market and the bond market depends on real live people who can actually be out of the office on holiday weeks. The lighter levels of participation can increase volatility and cause random movement for no apparent reason. We'll cross that bridge if we come to it. As far as Monday is concerned, there's no drama or weirdness to report. Bonds improved modestly throughout the day, thus allowing mortgage rates to move modestly lower.  Because rates were closer to the higher end of their recent range at the end of last week, the small drop means we're still very much inside the prevailing range. The next two days bring some backlogged economic data. Combined with the typical holiday-week caveats, volatility risk will thus be higher through Wednesday. 

Recent stock market losses have gotten a lot attention in the news recently. While there's no reliable correlation between stocks and interest rates, when stock losses are as big as they have been recently, it increases the tendency for rates to move in the same direction.  That was definitely the case today. Bonds (which dictate rates) improved overnight as stocks sank further. But as early as 7am, a reversal began to take shape. The catalyst was a comment from NY Fed Pres Williams who said he sees a good case for a rate cut at the upcoming December meeting. On one hand, improved rate cut odds are typically good for longer term interest rates.  That was apparent in the immediate moments following the the comment.  But in many cases, such comments are also good for stocks. On occasions where stocks aren't in the throes of a big sell-off, the net effect is often a divergence between stocks and rates (i.e. stocks move higher on Fed rate cut enthusiasm and bonds move lower for the same reason). In this week's case, because a decent amount of downward pressure on rates is attributable to recent stock losses, the rebound in stocks quickly gave way to upward pressure in rates. Fortunately, the overnight gains were large enough to absorb that upward pressure. As such, mortgage rates managed to hold on to a modest improvement versus Thursday's latest levels. This keeps rates in the same narrow, sideways range that's been intact since the late October Fed meeting. [thirtyyearmortgagerates]

Yesterday, we discussed the fact that mortgage rates were heading into Thursday with a disadvantage (for most lenders, anyway). This had to do with the fact that lenders prefer to avoid changing rates in the middle of the day (unless bond market movement is big enough to force their hands) and the fact that bonds had weakened just enough for lenders to begin considering changing rates by the end of the day. In other words, lenders either had to increase rates yesterday afternoon or this morning, all other things being equal. The only thing that would have mitigated that necessity would have been a bond market rally of equal size to yesterday's losses.  Fortunately, that's exactly what we saw after this morning's jobs report. The following chart shows movement in the actual bonds that control mortgage rates.  Bottom line: today's rates were the same as yesterday's because the red boxes were at similar levels.