Mortgage Market Summary as of February 12, 2018

Mortgage Rates End Week in Line With 4-Year Highs

Mortgage rates experienced some ups and downs last week (mostly ups), but ultimately weren't able to capitalize on a few attempts to move lower.  Monday's initial rate sheets were the highest in years, but they were soon superseded by afternoon improvements that followed the massive stock sell-off.  Rates will often improve during a day where stocks are panic-selling because panicked dollars need safe havens to hide out in.  The bond market (the thing that dictates rates) only got a small fraction of the safe-haven demand created by the stock rout.  Add the volatility and confusion into the mix and lenders weren't too interested in making huge changes to rate sheets.

From there, the rest of the week never saw anything as promising for the rate outlook.  Wednesday afternoon and Thursday morning were especially bad, bringing rates to even higher 4-year highs than seen on Monday morning.  The underlying bond market was able to hold its ground without any new highs in 10 year Treasuries.  Mortgage rates closely track 10 year Treasury momentum, but this week provided a good example of how the two can vary.  To be clear, mortgage rates made a new high in the middle of the week while 10 year Treasury yields did not.  

In terms of rate momentum for analytical purposes and forecasting, Treasuries do much more to set the tone than mortgage rates.  As such, that ground-holding in Treasuries MIGHT be a positive sign, but no one should treat it as such.  We have too many recent examples of rates seemingly leveling off only to break higher .  In any event, this Wednesday’s data (Consumer Price Index) could dictate the next big move if it comes in very far from expectations. 

Courtesy of Rick Lombardo 310.435.7439, Rick.Lombardo@grarate.com, VP of Mortgage Lending at Guaranteed Rate.

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