Market Summary
Two dominant themes characterize the week for mortgage rates: weakness and deceleration. After jumping abruptly higher at the end of January, the pace of the increases has slowed, but the regularity remains. This week now adds to a growing list of weeks that have seen borrowing costs revisit or surpass the previous week's highest levels. Best-Execution has leveled off at 3.625% for now, but the costs associated with that rate hit their highest levels since July 2012 on Wednesday.
Matthew Graham, Rates Strategist at Mortgage News Daily, says that the current rising rate environment is more complicated than it might seem. "It would be nice and perhaps comforting to mortgage rate watchers and rates Strategists alike if we could simply view recent bond market weakness as a byproduct of bullish stock market sentiment," Graham notes. "After all, we have plenty of history that generally points to Treasury and mortgage rates moving with a noticeable correlation to stock prices.
"It's tempting to lament the incessant bullishness in stocks and almost expect things to turn around soon, bringing rates back down with stock prices, but there's more than a mere stock rally guiding rates higher. Bond markets are currently undoing a lot of what they did in response in frightened anticipation of a disorderly collapse of the EU," explains Graham, referencing the unprecedented bond market rally in mid-2012.
"Throw in the ongoing adjustments to expectations of how and when the Fed will eventually curtail their bond-buying programs and you have two compelling arguments for rates to be on their current course regardless of equities markets. A stock sell-off could help rates modestly, but without that broader panic premium--from the EU or something similarly epic--even a high level of global economic weakness won't get 30yr rates back to 3.25% any time soon."
Matthew Graham, Rates Strategist at Mortgage News Daily, says that the current rising rate environment is more complicated than it might seem. "It would be nice and perhaps comforting to mortgage rate watchers and rates Strategists alike if we could simply view recent bond market weakness as a byproduct of bullish stock market sentiment," Graham notes. "After all, we have plenty of history that generally points to Treasury and mortgage rates moving with a noticeable correlation to stock prices.
"It's tempting to lament the incessant bullishness in stocks and almost expect things to turn around soon, bringing rates back down with stock prices, but there's more than a mere stock rally guiding rates higher. Bond markets are currently undoing a lot of what they did in response in frightened anticipation of a disorderly collapse of the EU," explains Graham, referencing the unprecedented bond market rally in mid-2012.
"Throw in the ongoing adjustments to expectations of how and when the Fed will eventually curtail their bond-buying programs and you have two compelling arguments for rates to be on their current course regardless of equities markets. A stock sell-off could help rates modestly, but without that broader panic premium--from the EU or something similarly epic--even a high level of global economic weakness won't get 30yr rates back to 3.25% any time soon."
30 Year Fixed Rate Mortgage
Week in Review
Rates shown below are based on the 30 Year Fixed Rate Mortgage
| Beginning Average: | 3.62% |
| Ending Average: | 3.62% |
| Weekly Change: | +0.00% |
| Yearly Change: | -0.30% |
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