Mortgage Rate Watch
Mortgage Rates Continue Recovering
Mortgage rates remain elevated in the context of the past decade and 2022 in general, but they continue making progress after hitting long-term highs early last week. While the general presence of high rates is due to inflation and resilient economic data, the highest highs were primarily a byproduct of a fiscal policy announcement in The UK.  Those policies were finally walked back in comments from UK officials early this morning.  Financial markets including the bond market (which dictates rates) cheered the news, with yields/rates dropping steadily by the time domestic trading was underway. Then at 10am, an important manufacturing report in the US showed a moderate contraction in the sector.  In addition to lower manufacturing activity, the indices tracking employment and prices also declined.  Economic contraction is the 2nd best thing that could happen for interest rates, right behind a massive, sustained drop in inflation.  As such, bonds cheered that news as well with many mortgage lenders updating rate offerings with slightly more favorable terms.  The average lender is now getting back into the middle to upper-middle 6% range depending on the scenario and the presence of "points" in the loan quote.  Economic data should continue to play a role in this week's rate momentum, with other significant reports set to come out on Wednesday and Friday.
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Even Crazier Than Last Week: Rates Briefly Topped 7% For 1st Time in 20 Years
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Crazy Volatility Continues as Rates Head Back Up
"The following information is deemed reliable only through September 29th, 2022.  After that, rates could be as much as .25-.50% higher or lower. " Every daily rate update needs to come with that sort of disclaimer these days.  We've been seeing some of the biggest day-to-day changes (and intraday changes) since our daily record keeping began in 2009.  The past 3 days have been right up there with a spike of more than 0.20% on Tuesday, a drop of more than 0.40% yesterday (in two phases), and a spike of almost 0.20% today. Most of the recent volatility is a factor of market panic that began in the UK late last week.  The initial reaction was a fast move toward higher rates, but when the Bank of England (The UK's version of the Fed) made an emergency announcement yesterday, rates plummeted... temporarily.  Today then became a day for the underlying bond market to find it's new trading range.  The Bank of England helped imply a ceiling at Tuesday's highs (when mortgage rates crested 7%).  Now today, inflation data from Germany helped imply a floor at roughly 6.625% (in terms of the average 30yr fixed rate for mortgages in the US).  These aren't hard and fast boundaries.  They could be challenged at any time depending on the data or event that catches the market's attention.   In the coming week, those events are more likely to be tied to US economic data as several big-ticket reports come out.  Volatility potential will be especially high on  October 13th when the next Consumer Price Index (CPI) is released. 
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Huge Reversal For Mortgage Rates. No Promises of Sustainability
If you're just getting caught up, mortgage rates broke above 7% yesterday for the first time since 2002.  Read our coverage to learn more about why rate quotes are all over the board: Yes, Mortgage Rates Are Now Over 7%, But It's Complicated. Today was an entirely different day.  In fact, rates dropped not only back below yesterday's levels, but all the way back to the end of last week (Thursday afternoon-ish, depending on the lender).  This wasn't necessarily the case earlier this morning, but almost every lender adjusted their rate offerings in the middle of the day--in many cases multiple times. Mortgage rates are based on bonds.  When bonds rally enough, mortgage lenders issue these "mid-day reprices."   Why were bonds so happy?  Happy isn't the right word for it.  "Relieved" would be more appropriate.  A fiscal policy announcement in the UK is at the heart of all of the drama over the past few days, and while that has not been retracted or changed, a MONETARY policy decision in the UK helped to sooth financial markets early this morning.   In short, the British government said things that spooked investors in a major way.  Then the British central bank announced an emergency bond buying operation to un-spook them.  British 10yr yields fell more than half a point in 40 minutes.  US bonds followed gingerly by comparison, just as they followed on the way up (US bond market movement has been less than half as abrupt as that of the UK).
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Yes, Mortgage Rates Are Now Over 7%, But It's Complicated
It's no mystery that mortgage rates have been moving relentlessly higher in 2022. But how high is high?  That will depend on a number of factors, including: The date and time of day of the quote (things change quickly) The  lender in question (different lenders have slightly different pricing and can have vastly different quoting practices) The specifics of the scenario (loan-to-value ratio, loan purpose, credit score, etc) The presence of "points" and other upfront costs in the rate quote.  For our purposes today, we're mainly focused on the presence of points and, to a lesser extent, the variations between lenders.  As always, any rate you see in a major rate index or survey will assume essentially no "hits" (no upward adjustments to the rate or the upfront costs due to the particulars of your scenario).   The same is true of our daily rate tracking, which is now over 7%.  But it's important to note that you may or may not actually see a rate quote of over 7%.  To truly understand why, you'd need a basic understanding of how mortgage-backed securities (MBS) translate to mortgage rates (there's a primer for that).  If you don't click the primer, here's an attempt to distill a tome into a paragraph: MBS are bonds comprised of multiple mortgages.  They're offered in 0.5% increments called coupons.  Each coupon is like a bucket that can contain a certain range of mortgage rates with +1.125% being the upper limit. 
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