After hitting long-term highs on May 19th, mortgage rates dropped somewhat quickly by May 26th. Ever since then, they've been moving back and forth in a very narrow range. Today's movement happened to be the good kind with the average lender cutting top-tier 30yr fixed rates by 0.03%. As always, keep in mind that mortgages are most commonly offered in 0.125% increments. When our daily rate index changes by only 0.03%, it's because we are also measuring the underlying costs associated with any given rate and extrapolating the relative impact on interest rates. To use a crude example, let's consider two different hypothetical rate quote options yesterday and today. Yesterday 6.625% at a cost of $12 upfront 6.50% at a cost of $24 upfront Today 6.625% at a cost of $9 upfront 6.50% at a cost of $21 upfront Now pretend you only have $15 to spend for closing costs. You still can't afford to buy your rate down to 6.5%, and you'll still be choosing the 6.625% quote. But while the interest rate portion of your quote didn't change, the actual interest cost improved.  Our index captures and expresses these improvements in a single number. 

Imagine being stuck at home watching TV for 3 months and only being able to stream one show. That's been the case for the bond market (which dictates interest rates) since the beginning of March. The show in question involves watching war-related headlines and reacting in roughly the same manner as oil prices. Today's episode was more interesting than yesterday's. Key details included reports of Iranian missile strikes on various U.S. and allied targets. In general, rates have improved on news that increases the odds of a peace deal. Unsurprisingly, today's headlines (technically, yesterday night, but reflected in today's rate movement) did the opposite. Thanks to headline fatigue and desensitization, the rate market has been responding with less volatility over the past few weeks. As such, today's increase was fairly modest in the big picture but nonetheless leaves rates near their highest levels in more than 9 months. [thirtyyearmortgagerates]

It was an uneventful day for the bond market and, thus, mortgage rates. Unlike the average trading day of late, there were no conspicuous war-related headlines making for shocks to oil prices. Since the start of the war, interest rates have had a strong correlation with oil prices due to inflation implications. That correlation was present today, but oil moved lower and higher well inside yesterday's range.  Top tier 30yr fixed rates fell from 6.60 to 6.57% for the average lender. This is very close to the lowest level in more than 2 weeks (6.56% seen last Friday). 

Following last week's relatively strong move to the lowest levels since May 14th, mortgage rates bounced slightly higher to start the news week. The move followed a clear shift in the Iran war news cycle with morning headlines citing Iranian officials saying the peace negotiation were effectively tabled as long as hostilities remained between Israel and Lebanon. As a refresher, the Iran war is bad for rates primarily due to the actual and implied impact on inflation due to higher fuel costs. Bonds dictate rates and bonds hate inflation. There was an immediate and moderately sharp reaction in both oil prices and bonds right when this morning's news came out. Fortunately, the damage was fairly mild for mortgage rates with the average lender moving up 0.04% to 6.60% for a top tier 30yr fixed scenario. This is still 0.10% lower than the most recent high of 6.70% seen on May 19th.

While there are still a few hours left in the trading day, it's a near certainty that this week will end with mortgage rates at meaningfully lower levels compared to last Friday. Today is only adding modestly to that trend, but that makes it the 8th straight business day where rates have either held steady or moved lower. On that note, it's possibly worth considering that these sorts of winning streaks have definite life spans. We've certainly seen stretches of more than 10 business days without any upward movement in rates, but they're very rare. Even then, if the streak were to end on Monday or Tuesday, it may only be a temporary blip before more improvement. The bigger-picture issue remains the state of the Iran war. If it officially ends, rates likely have more room to improve. If hostilities re-escalate, rates could move back up into the recently higher range. [thirtyyearmortgagerates]