Mortgage Rate Watch
Mortgage Market Ridiculously Good or Just Ridiculous?

It should no longer come as a surprise that the pandemic continues to create never-before-seen circumstances in all corners of society. Here in the housing and mortgage markets, one of the first major manifestations of the crisis was a quick move to incredibly low rates.

With record after record being set in close succession, the mortgage environment has been ridiculously good for most homeowners. For others, it's just been ridiculous.

Record low rates make a lot of sense given the economic outlook.  In general, economic weakness coincides with lower rates, and there's been plenty of that to go around.

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Mortgage Rates Defy Odds, Improving Yet Again From Record Levels

There are two kinds of headlines about mortgage rates today: those that rely on the weekly survey-based data published each Thursday by Freddie Mac, and those who rely on the actual daily average rate compiled by Mortgage News Daily.  In both cases, the headlines can claim new record low rates, but each source is referring to a different instance of all-time lows. for the average lender.  

Specifically the all-time lows I told you about on Monday are the same all-time lows Freddie Mac is talking about today (Freddie's survey only covers the first part of any given week and tends to heavily favor Mondays).  And the all-time lows I'm talking about today are those that have yet to be captured by Freddie's survey.  Indeed, they may not be captured at all if rates happen to move up by the beginning of next week.

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Fairly Innocent Wake-Up Call For Mortgage Rate Watchers

Mortgage rates were unchanged today for the average lender.  That means they remain at all-time lows that are even lower than the all-time lows seen during the previous 3 business days.  Even so, today's underlying market movement might be a bit of a wake-up call for anyone waiting to lock an interest rate.

In general, the decision to lock or float a mortgage rate has had low consequences recently.  While that will likely continue to be the case until the coronavirus situation meaningfully improves, it doesn't mean we should fall asleep at the wheel.  We need to remain vigilant for signs that the most recent all-time low mortgage rates are the last we'll see for months or years. 

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Mortgage Rates Just Got Even Lower

Mortgage rates were already at all-time lows yesterday, and had been holding at those levels for at least 3 business days for the average lender.  I normally tell people that mortgage lenders are hesitant to drop rates very aggressively when they're already at all-time lows, and that's always been the case.  At least it had been the case before coronavirus. 

Even then, the past 3 business days were making a similar case.  Rates had bottomed out and the broader bond market (which ultimately drives mortgage rates) looked like it preferred a flat trajectory to one that continued to even deeper all-time lows.  

The bonds that specifically underlie the mortgage market had other ideas.  So far this week, they've improved much more noticeably than the bond market's poster child the 10yr Treasury yield.  10yr yields aren't even back to last week's best levels.  Mortgage bonds, on the other hand have blown right past theirs.  

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Mortgage Rates Staying Very Flat and Very Low

Mortgage rates barely budged for the third straight day, which is welcome news considering they are at all-time lows. The stability comes in spite of at least two important economic reports that would normally push rates unequivocally higher according to past precedent.  These include Thursday's big jobs report and a key barometer of the services sector released this morning.  Both pieces of data suggested an economic recovery is well underway.

Even though there is certainly a lot more ground to cover before anyone would consider the economy to be "mostly restored' to pre-COVID levels, financial markets are usually willing to reward progress toward such goals

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