Mortgage rates are determined by the bond market, and bond traders have a lot on their minds these days. After hitting the highest levels in years about 4 months ago, rates have rebounded into a volatile, but still mostly sideways range. Mid-June was the worst while late July was the best. There was more than a full percentage point difference between these two periods in terms of 30-year fixed mortgage rates.
At the end of last week, the average lender was much closer to the recent peak after spending all of August climbing. Traders continue to digest economic data and inflation reports that suggest July’s push to lower rates was premature.
In today’s case, inflation data overseas had a trickle down effect that impacted US bonds. The impacts were limited, but they contributed to some initial volatility. Then at 10 a.m., a strong consumer confidence report pushed bond yields higher. Cautious comments from a senior Federal Reserve official added some fuel to the fire.
All of the above has led to a few lenders changing their rate sheet offers mid-day or simply walking out of the door more conservatively than they otherwise would. The average lender was very close to yesterday’s levels which, in turn, were the highest we’ve seen since June.
Volatility remains a big risk as the rest of the week brings additional economic data that can catch traders’ attention. These risks culminate for this week on Friday morning with the next monthly installment of the Heavy Works report.
This page contains a mortgage rate volatility chart: https://www.mortgagenewsdaily.com/mortgage-rates/volatility. It may not be as high as it was at the start of 2020 in absolute terms, but the high readings have been in place for much longer now – the longest period of volatility this high since we started keeping records. dailies in 2009.