Mortgage rates didn't move much today. Some lenders were perfectly unchanged, but the average lender was just slightly higher. That's at odds with underlying bond market movement (which directly impacts rates)--at least at first glance. Specifically, the bonds underlying mortgages were slightly stronger today. That would imply slightly lower mortgage rates. So why did rates rise?
As is often the case, today's seemingly paradoxical movement is due to timing. Bonds were weakening ever-so-slightly yesterday--something that's consistent with lenders raising rates. But the bond market didn't weaken enough for lenders to make those changes in the middle of the business day....(read more)
Mortgage rates were sideways to slightly higher today, prolonging a 3-day trend of exceptionally light volatility. The 5 days before that (beginning on Wednesday, October 3rd) were completely different, with a huge move higher at first followed by a moderate recovery at the beginning of last week. That recovery largely followed the stock market weakness.
Stocks and rates don't always move in the same direction, but when stocks fall as quickly as they did last week, rates usually benefit. After such moves level-off, rates tend to wait for stocks to see if there will be an aftershock or a big bounce. For now, it doesn't look like stocks have made up their mind yet, as they too have continued in a largely sideways pattern during the last 3 trading sessions....(read more)
Mortgage rates held relatively steady today, finally leveling off after two solid days of improvement driven by the week's big stock market sell-off. Stocks and rates don't always move in the same direction at the same time, but when stocks make a big move lower, rates tend to benefit. This week's move lower in stocks was the 3rd largest since the financial crisis. In that light, we only saw a mere token of improvement for mortgage rates, but we'll take what we can get considering it was the only meaningful drop in rates since August 10th....(read more)
Mortgage rates fell today as the stock market sell-off remained in focus. Stocks and rates certainly don't have a linear and predictable relationship, but when stocks move lower as quickly as they have over the past 2 days, rates tend to see at least some benefit. Even though yesterday's stock sell-off was much worse, today was a better day for rates due to timing. Simply put, the mortgage market didn't have quite enough time to adjust to the move in stocks before the close of business. Lenders who did change rates yesterday were somewhat conservative with those changes in the event stocks bounced back in a major way. When stocks failed to improve overnight, mortgage lenders passed along more of the improvements seen in the underlying bond market....(read more)
Mortgage rates are based on mortgage-backed securities (MBS), which are essentially bonds. Conventional wisdom holds that stocks and bonds supplement one another, and that as "money moves in" to one side of the market, it will move out of the other. Conventional wisdom is super duper wrong!
If conventional wisdom held true today, we would have seen a very big move lower in rates. The massive sell-off in stocks means there was a huge amount of cash looking for a new home. While it's true that some of this cash did find its way into the bond market, the amount doesn't even begin to compare. By the end of the day, the bonds most closely tied to mortgage rates had barely reentered positive territory....(read more)