Mortgage Rate Watch
Mortgage Rates Surprisingly Resilient Despite Moving Slightly Higher After Jobs Report Fri, 08 Dec 2023 21:35:00 GMT

Heading into this week (and even throughout the entirety of last week) we were mostly focused on seeing today's jobs report for the next big dose of influence on the mortgage rate landscape. Unsurprisingly, a strong report resulted in higher rates, but not as high as we might have imagined. In fact, many borrowers will barely see a difference compared to yesterday's rate offerings with the average lender still in the low 7s for a flawless scenario. The jobs report showed moderately stronger job creation compared to the median forecast.  In addition, the unemployment rate came in at 3.7% versus 3.9% previously (also the forecast for today). Strong labor market data is bad for rates, all other things being equal, because a stronger economy runs the risk of higher inflation and inflation is the mortal enemy of interest rates. Investors will now turn their attention to a report that's actually focused on inflation: next Tuesday's Consumer Price Index (CPI)--the only other monthly economic report that could claim to be as important as the jobs report (as far as interest rates are concerned).  A day later, we'll get a new set of rate forecasts from the Fed.  As the news focuses on the fact that the Fed "held rates steady," financial markets will be dissecting those forecasts in order to hone in on the expected shift in the Fed's outlook heading into 2024.  Bottom line: the combination of Tuesday and Wednesday's events could create more volatility for rates than today's jobs report.  
Mortgage Rates Roughly Unchanged Today, But Probably Not Tomorrow Thu, 07 Dec 2023 21:59:00 GMT

If you're reading this on Thursday, December 7th, it is the day before the big jobs report--the one that has all the potential in the world to cause huge reactions for interest rates.  It's not that lenders are watching the economic data and then guessing at how to adjust their rates in response.  Lenders are watching the bond market to determine the true value of the loans they originate and the bond market is watching the economic data! Bond traders will be the first to tell you, if there is one monthly economic report with the most consistent track record of inspiring volatility for bonds/rates, this is it.  This particular installment is more interesting than normal given the transition that's been taking place in terms of other economic data and the Federal Reserve's assessment of the economy. In not so many words, the economy is coming off the boil and even the Fed has been willing to acknowledge that.  But the Fed is also pragmatic, saying that we don't have enough data to confirm that the corner toward lower rates has officially been turned.  Bottom line: tomorrow's jobs report provides another important step in that confirmation process.  If it's much stronger than expected, rates will likely bounce back up.  If it's weaker than expected, rates should continue lower (or hold their recently achieved low ground, at the very least). As for today, it was forgettable in terms of rate movement, but still quite nice in the sense that the average lender remained in line with the lowest levels in more than 4 months.
Another Day, Another 4-Month Low Wed, 06 Dec 2023 21:47:00 GMT

Mortgage rates are hitting lower milestones like it's their nine to five recently and today was just another day at the office.  The average lender was only modestly lower versus yesterday, but since yesterday was effectively a 4 month low, today therefore deserves the same recognition. In fact, today's version is a bit more legitimate as we no longer need to make any excuses for the brief moments on August 6th-9th when the average was microscopically lower.  Today's rate sheets are now clearly a bit better than those. If rates seem determined to improve, it's because economic data has remained supportive of that effort.  Today's ADP Employment was lower than expected.  While this wasn't a huge deal for rates, it didn't hurt.  15 minutes later, Q3 labor cost data came in 0.3% below forecasts, adding to the gains.  After the data, oil prices and foreign central bank comments helped maintain the supportive environment. These factors won't always ensure the same reaction in rates, but at present, the bond market is receptive to any sign of a shift in the economy, inflation, and the official policy response. On that note, there's a lot of anticipation for Friday's big jobs report and the updated rate outlook from the Fed next Wednesday.  In short, markets are increasingly getting in position for the data and the Fed to confirm that the perceived shift in rate momentum is valid and sustainable.  
Mortgage Rates Effectively At 4 Month Lows Tue, 05 Dec 2023 21:26:00 GMT

Right from the start and with only a few days that didn't fit the narrative, November was a stellar month for mortgage rates, and December is picking up right where it left off.  The first few days of the new month have only seen rates move lower by 0.07%, but that's a strong showing considering the drop of almost 3/4th of a percent from 10/31 through 11/30. Frequently, when rates enjoy winning streaks of that size and duration, we'll see a more concerted effort in financial markets to circle the wagons and push back a bit.  One could make a case that we saw just that sort of push-back between Nov 3rd and 13th when the average rate rose 0.20%, but even that was a small correction relative to 0.50% drop seen over the first 3 days of the month. The absence of 2-way volatility has been especially notable since 11/15/23 without any spike bigger than 0.03.  What's up with this uncanny, super-stable strength? [thirtyyearmortgagerates] In not so many words, the data and events have justified what we've seen up until this point.  11/14/23 was the last major inflation report and it was good for rates.  Since then, there haven't been any big red flags in other reports.  Fed speakers have been open-minded about what comes next for rate policy.  Even when we look at more loosely-related threats to rates, such as energy prices (due to their inflation implications), we find oil at the lowest levels since July. Incidentally, mortgage rates are now effectively at the lowest levels since July, albeit late July.  There have been a few days where our 30yr fixed rate index was slightly lower, but not by enough that the average borrower would see a difference in a rate quote.
Mortgage Rates Move Slightly Higher, But Still Effectively at 3-Month Lows Mon, 04 Dec 2023 20:29:00 GMT

Apart from this past Friday, you'd have to go back to September 1st to see lower mortgage rates than today.  It probably makes the best sense to view last Friday as a slightly overdone rally as opposed to viewing today as some sort of ominous shift. More importantly, it probably doesn't matter which way it's viewed because the incoming economic data has the potential to send rates significantly higher or lower.  We've had our eye on the next 4 days of data for 3 weeks now due to the ate market's preference for two key monthly economic reports. The first key report is CPI, the consumer price index, which serves as the most widely traded update on inflation. The last release was on November 14th and it sent rates quickly lower. The other key report is the big jobs report, aka "The Employment Situation" or NFP (an abbreviation of the data's headline component: non-farm payrolls).  That doesn't arrive until Friday, but NFP week brings several supporting actors that often get the volatility rolling in one direction or the other.  The first of these (ISM Non-Manufacturing and the Job Openings and Labor Turnover Survey) will be out tomorrow morning at 10am ET. In many ways, this entire week of data is in a position to confirm or reject the positive rate momentum seen over the past 3 weeks. For today, the average lender remains in the low 7% range for a top tier conventional 30yr fixed scenario.  
Another Surprisingly Strong Day For Mortgage Rates Fri, 01 Dec 2023 22:05:00 GMT

Just yesterday, we were nodding in agreement and acceptance of the fact that rates were better served by cooling off a bit (read: "rising") after improving at a pace that seemed too quick for the motivations earlier in the week.  In other words, it was a bit of a pickle to explain why Tuesday and Wednesday's news and data were worth a surge to 3-month lows. Now today, we're right back in the same pickle, but everyone who's cool knows that pickles are delicious.  Today's is no exception with the average lender easily moving down to new 3-month lows. As for motivations, today actually wasn't quite as pickled as Wednesday.  We had the week's most anticipated economic report and the most anticipated Fed speech. ISM Manufacturing only came in a bit weaker than expected (good for rates), but perhaps more importantly, it didn't come in higher than expected.  Thus, the bond/rate market wasn't forced to quickly change its strategy of adjusting for a new, lower rate outlook for 2024.   Same story with Fed Chair Powell's mid-day speech.  Knowing what we know about Powell, it wasn't too likely that he'd take a strong stand in one direction or the other (which is exactly right given the "data dependent" nature of the Fed's rate considerations), but some saw a risk that he would intentionally try to nudge rates higher due to the speed with which they've recently fallen. Powell definitely didn't convey any such agenda today and bonds/rates were invigorated as a result.  Traders moved to defend against the possibility that next week's data continues arguing for lower rates.  We say "defend" because if the data is accordingly weak, the current level of rates is far too high.  
Mortgage Rate Winning Streak Finally Ends, But Just Barely Thu, 30 Nov 2023 20:08:00 GMT

If you count the Friday after Thanksgiving as a business day, mortgage rates had fallen for 6 straight days as of yesterday afternoon.  Moreover, they'd reached the lowest levels in 3 months and had put an impressive amount of distance between themselves and the highs seen just over a month ago. Ironically, yesterday's analysis expressed some measure of bewilderment at just how much better rates were versus the previous day.  Now today, we see that all good things--especially those that look a little TOO good--come to an end. This isn't necessarily a bad thing.  When rate rallies continue unabated, the certainty and swiftness of the eventual rebound only increase.  By undergoing a moderate rebound in a measured, logical way, rates have made it easier for themselves to remain in the current range without excess volatility. That doesn't mean volatility is out of the question, but it's more likely to be seen in response to the big ticket economic data that typically inspires bigger swings in rates.  We won't get most of that big ticket data until next week, but there is a chance that tomorrow morning's ISM Manufacturing index will spark a reaction if it's much higher or lower than expected. As is always the case, there's no way to know if the data will be good or bad for rates ahead of time.  All we know is that the rate market is incredibly interested in the upcoming data as an indication of whether rates have officially turned a corner in the big picture.  While that's exciting (or scary), keep in mind that it would take several months of cohesive data to do the trick.
Lowest Mortgage Rates in Nearly 3 Months Wed, 29 Nov 2023 22:03:00 GMT

There were no major economic reports or news headlines in play today.  Movement in the bond market (which underlies mortgage rate changes) was orderly and moderate.  There were no major changes in high level lending costs or any other costs that would impact mortgage rates.  Despite all that, rates improved appreciably compared to recent days, ultimately hitting the best levels in almost exactly 3 months. For some context, those levels from 3 months ago were very close to multi-decade highs at the time.  After that, rates simply added insult to injury through the end of October.  November, on the other hand, has moved reasonably quickly to push top tier 30yr fixed rates back into the high 6% range. Officially, we're not there yet.  The average lender is still in the low 7% range, but that is a huge improvement from several weeks ago.  If tomorrow were to turn out as good as today, the index would break below 7%. Whether or not tomorrow is as good as today is completely unknowable.  Actually, perhaps it's somewhat knowable.  We can say that, all other things being equal, it is tremendously uncommon for two successive days to be as good as today.  It does happen, but typically only with obvious motivations.   The bigger questions, risks, and opportunities remain in the week ahead when we'll have multiple opportunities to see obvious motivations among several highly consequential economic reports. 
Rates Glide Gently to New 2-Month Lows Tue, 28 Nov 2023 20:52:00 GMT

The trend in rates has been very linear in the 2nd half of the month and the day-to-day changes have been getting smaller and smaller. On 5 of the last 6 business days, the average 30yr fixed rate has moved by less than 0.02% by the end of the day. Conveniently, most of the gentle moves have been in a friendly direction.  With rates already at 2 month lows last week, the result is gentle descent to slightly lower 2 month lows. Today's improvement followed the bond market's reaction to comments from the Fed's Chris Waller who said that the Fed could cut rates if inflation continued to decline for several months.  Waller also reiterated and amplified his previous comments on the slower pace of economic growth. Specifically, last month Waller said that we'd either need to see slower growth or face a resurgence of inflation.  Today's comments hearkened back, saying "something appears to be giving, and it's the pace of the economy." There are no extremely high profile economic reports on tap this week, so the market is perhaps more willing to react to guidance from Fed speakers.  It continues to be the case that next week's economic data can have a much larger impact--especially Friday's jobs report. [thirtyyearmortgagerates]
Mortgage Rates Undo Any Potential Damage From Last Friday Mon, 27 Nov 2023 20:23:00 GMT

Thanksgiving week is always an interesting (and frequently frustrating) time for the bond market that underlies day to day interest rate changes.  Markets are traded by humans, even in cases where humans are programing machines to do the trading, and human participation dwindles on certain holiday weeks. As participation decreases, trading levels can jump around in a more random way as fewer people and fewer dollars constitute a larger percentage of the overall trading environment.  That can lead to volatility in mortgage rates as was the case on Friday for lenders that actually updated rates from Wednesday. In other words, the bond market pointed to a moderate jump in rates on Friday. There was a good chance the jump was an artificial byproduct of Thanksgiving week, but there was no way to be sure until today.  Now we're sure. Bonds quickly moved back in line with Wednesday's levels and the average mortgage lender did the same.  That's good news considering last Wednesday's mortgage rates were right in line with the lowest levels of the past 2 months.

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