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Mortgage Rate Watch

A new home can be the biggest purchase of your life. Before you start looking for the right home, you may want to research your mortgage options.

But not all mortgages are created equal. So, by doing your research beforehand, you can choose the option that best suits your financial situation and potentially puts more money in your pocket. You also know what guidelines to follow when applying.

Types of mortgages

  • Conventional loan – Best for borrowers with a good credit score
  • Jumbo loan – Best for borrowers with excellent credit looking to buy an expensive home
  • Government-insured loan – Best for borrowers who have lower credit scores and minimal cash for a down payment
  • Fixed-rate mortgage – Best for borrowers who’d prefer a predictable, set monthly payment for the duration of the loan
  • Adjustable-rate mortgage – Best for borrowers who aren’t planning to stay in the home for an extended period, would prefer lower payments in the short-term and are comfortable with possibly having to pay more in the future

Conventional loans, which are not backed by the federal government, come in two forms: conforming and non-conforming.

Conforming loans – As the name implies, a conforming loan “conforms” to the set of standards put in place by the Federal Housing Finance Agency (FHFA), which includes credit, debt and loan size. For 2023, the conforming loan limits are $726,200  in most areas and $1,089,300 in high-cost areas.

Non-conforming loans – These loans do not meet FHFA standards. Instead, they cater to borrowers looking to purchase more-expensive homes or individuals with unusual credit profiles.

Pros of conventional loans

  • Can be used for a primary home, second home or investment property
  • Overall borrowing costs tend to be lower than other types of mortgages, even if interest rates are slightly higher
  • Can ask your lender to cancel private mortgage insurance (PMI) once you’ve reached 20 percent equity, or refinance to remove it
  • Can pay as little as 3 percent down on loans backed by Fannie Mae or Freddie Mac
  • Sellers can contribute to closing costs

Cons of conventional loans

  • Minimum FICO score of 620 or higher is often required (the same applies for refinancing)
  • Higher down payment than some government loans
  • Must have a debt-to-income (DTI) ratio of no more than 45 percent (50 percent in some instances)
  • Likely need to pay PMI if your down payment is less than 20 percent of the sales price
  • Significant documentation required to verify income, assets, down payment and employment

Who are conventional loans best for?

If you have a strong credit score and can afford to make a sizable down payment, a conventional mortgage is probably your best pick. The 30-year, fixed-rate mortgage is the most popular choice for homebuyers.

Jumbo mortgages are home loan products that fall outside FHFA borrowing limits. Jumbo loans are more common in higher-cost areas such as Los Angeles, San Francisco, New York City and the state of Hawaii, where home prices are often on the higher end.

Pros of jumbo loans

  • Can borrow more money to purchase a more expensive home
  • Interest rates tend to be competitive with other conventional loans
  • Often the only finance option in areas with extremely high home values

Cons of jumbo loans

  • Down payment of at least 10 percent to 20 percent required in many cases
  • A FICO score of 700 or higher usually required
  • Cannot have a DTI ratio above 45 percent
  • Must show you have significant assets in cash or savings accounts
  • Usually require more in-depth documentation to qualify

Who are jumbo loans best for?

If you’re looking to finance a home with a selling price exceeding the latest conforming loan limits, a jumbo loan is likely your best route.

The U.S. government isn’t a mortgage lender, but it does play a role in making homeownership accessible to more Americans by guaranteeing certain types of loans — thus lessening the risk for lenders. Three government agencies back mortgages: the Federal Housing Administration (FHA), the U.S. Department of Agriculture (USDA) and the U.S. Department of Veterans Affairs (VA).

  • FHA loans – Backed by the FHA, these home loans come with competitive interest rates, and help make homeownership possible for borrowers without a large down payment or pristine credit. You’ll need a minimum FICO score of 580 to get the FHA maximum of 96.5 percent financing with a 3.5 percent down payment.  However, a score as low as 500 is allowed if you put at least 10 percent down. FHA loans require mortgage insurance premiums, which can increase the overall cost of your mortgage. Lastly, with an FHA loan, the home seller is allowed to contribute to closing costs.
  • USDA loans – USDA loans help moderate- to low-income borrowers who meet certain income limits buy homes in rural, USDA-eligible areas. Some USDA loans do not require a down payment for eligible borrowers. There are extra fees, though, including an upfront fee of 1 percent of the loan amount (which can typically be financed with the loan) and an annual fee.
  • VA loans – VA loans provide flexible, low-interest mortgages for members of the U.S. military (active duty and veterans) and their families. There’s no minimum down payment, mortgage insurance or credit score requirement, and closing costs are generally capped and may be paid by the seller. VA loans charge a funding fee, a percentage of the loan amount, which can be paid upfront at closing or rolled into the cost of the loan along with other closing costs.

Pros of government-insured loans

  • Help you finance a home when you don’t qualify for a conventional loan
  • Credit requirements more relaxed
  • Don’t need a large down payment
  • Available to repeat and first-time buyers
  • No mortgage insurance and no down payment required for VA loans

Cons of government-insured loans

  • Mandatory mortgage insurance premiums on FHA loans that usually cannot be canceled
  • FHA loan sizes are lower than conventional mortgages in most areas, limiting potential inventory to choose from
  • Borrower must live in the property (although you may be able to finance a multi-unit building and rent out other units)
  • Could have higher overall borrowing costs
  • Expect to provide more documentation, depending on the loan type, to prove eligibility

Who are government-insured loans best for?

Are you having trouble qualifying for a conventional loan due to a lower credit score or minimal cash reserves for a down payment? FHA-backed and USDA-backed loans could be a viable option. For military service members, veterans and eligible spouses, VA-backed loan terms are often more generous than a conventional loan’s.

Fixed-rate mortgage

Fixed-rate mortgages maintain the same interest rate over the life of your loan, which means your monthly mortgage payment always stays the same. Fixed loans typically come in terms of 15 years or 30 years, although some lenders allow borrowers to pick any term between eight and 30 years.

Pros of fixed-rate mortgages

  • Monthly principal and interest payments stay the same throughout the life of the loan
  • Easier to budget housing expenses from month to month

Cons of fixed-rate mortgages

  • If interest rates fall, you’ll have to refinance to get that lower rate
  • Interest rates typically higher than rates on adjustable-rate mortgages (ARMs)

Who are fixed-rate mortgages best for?

If you are planning to stay in your home for at least five to seven years, and want to avoid the potential for changes to your monthly payments, a fixed-rate mortgage is right for you.

In contrast to fixed-rate loans, adjustable-rate mortgages (ARMs) have interest rates that fluctuate with market conditions. Many ARM products have a fixed interest rate for a few years before the loan changes to a variable interest rate for the remainder of the term. For example, you might see a 7/6 ARM, which means that your rate will remain the same for the first seven years and will adjust every six months after that initial period. If you consider an ARM, it’s essential to read the fine print to know how much your rate can increase and how much you could wind up paying after the introductory period expires.

Pros of ARMs

Lower fixed rate in the first few years of homeownership (although this isn’t a guarantee; as of late, 30-year fixed rates have actually been similar to those for 5/6 ARMs)
Can save a substantial amount of money on interest payments

Cons of ARMs

Monthly mortgage payments could become unaffordable, resulting in a loan default
Home values may fall in a few years, making it harder to refinance or sell before the loan resets

Who are adjustable-rate mortgages best for?

If you don’t plan to stay in your home beyond a few years, an ARM could help you save on interest payments. However, it’s important to be comfortable with a certain level of risk that your payments might increase if you’re still in the home.

Other types of home loans

In addition to these common kinds of mortgages, there are other types you may find when shopping around for a loan:

  • Construction loans: If you want to build a home, a construction loan can be a good financing choice — especially a construction-to-permanent loan, which converts to a traditional mortgage once you move into the residence. These short-term loans are best for applicants who can provide a higher down payment and proof that they can afford the monthly payments.
  • Interest-only mortgages: With an interest-only mortgage, the borrower makes interest-only payments for a set period – usually five and seven years — followed by payments for both principal and interest. You won’t build equity as quickly with this loan, since you’re initially only paying back interest. These loans are best for those who know they can sell or refinance, or for those who can reasonably expect to afford the higher monthly payment later.
  • Piggyback loans: A piggyback loan, also referred to as an 80/10/10 loan, involves two loans: one for 80 percent of the home price and another for 10 percent. You’ll make a down payment for the remaining 10 percent.These loan products are designed to help the borrower avoid paying for mortgage insurance. But piggyback loans require two sets of closing costs, and you’ll also accrue interest on two loans, making this unconventional arrangement these best for those who will actually save money using it.
  • Balloon mortgages: A balloon mortgage requires a large payment at the end of the loan term. Generally, you’ll make payments based on a 30-year term, but only for a short time, such as seven years. When the loan term ends, you’ll make a large payment on the outstanding balance, which can be unmanageable if you’re not prepared or your credit situation deteriorates. These loans are best for those who have the stable financial resources needed to make a large balloon payment once the loan term ends.


Mortgage Rate Winning Streak Finally Ends, But Just Barely
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.

  Mortgage Rate Watch

 6 days 17 hours ago

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Lowest Mortgage Rates in Nearly 3 Months
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. 

  Mortgage Rate Watch

 1 week ago

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Rates Glide Gently to New 2-Month Lows
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 Rate Watch

 1 week 1 day ago

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Mortgage Rates Undo Any Potential Damage From Last Friday
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.

  Mortgage Rate Watch

 1 week 2 days ago

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Mortgage Rates Roughly Unchanged Yet Again
"Lower volatility and more sideways momentum" have been the themes as we've moved away from last week's more consequential economic data.  The underlying bond market has been microscopically stronger since then and that's resulted in microscopically lower rates.   But for all intents and purposes, rates have simply been flat at 2 month lows for about a week and today did very little to change that.  At the risk of reiterating the same message again, there aren't any obvious reasons for that to change until we get some more important economic data--something that won't unequivocally be the case until the first week of December. The bond market and mortgage lenders will be closed for the Thanksgiving holiday tomorrow.  The bond market is technically open for a half day on Friday, but not every mortgage lender will be publishing rate sheets.  Those who do may employ different strategies than normal, so you're essentially waiting for next Monday before truly knowing how mortgage rates are evolving in the short term. Again, we're not expecting a great deal of "evolution," but anything's possible.  The safest conclusion is to assume there's an infinitely greater risk/chance of big movement during the following week--especially after the jobs report on Friday, Dec 8th.

  Mortgage Rate Watch

 2 weeks ago

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Mortgage Rates Officially Hit 2 Month Lows
The bond market that underlies mortgage rates has had several decent days in a row with trading levels in excellent territory relative to the past two months and minimal volatility day-over-day.  Today added to the winning streak amid another lack of meaningful economic data and an absence of any new news in the scheduled release of the minutes from the Fed's policy-setting meeting 3 weeks ago. In this sort of "holiday light" trading environment, bonds are still moving, but those movements are a bit more random and the range is a bit narrower.  Today could have gone either way.  If bonds had lost ground, the average mortgage lender might have quoted microscopically higher rates.  But because the random drift resulted in modest bond market improvement, the average mortgage lender was able to offer slightly lower mortgage rates compared to yesterday. This is a bit of a short-term milestone due to the fact that yesterday's rates were right on the cusp of officially breaking the lowest levels in 2 months.  As such, today's improvement makes it official.  You'd have to go back to September 20th to see anything lower. In the even bigger picture, any progress at this stage helps to build the sense that the highest rates are behind us and that the bond market is cautiously considering a long, slow descent back to levels that should be a lot more palatable to the housing market.  It's WAY too soon to confirm such things, but at least we can say that the past month would certainly fit the pattern of a long-term ceiling. 

  Mortgage Rate Watch

 2 weeks 1 day ago

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Boring Day For Mortgage Rates, But That's a Good Thing
Mortgage rates moved down to the lowest levels in roughly 2 months last week.  To be fair, they had already hit similar levels earlier in the month after the jobs report on November 3rd.  This time around, we've seen two consecutive business days at nearly the same, low levels. "Low" is relative, of course.  Before September, today's rates would have been depressingly high, but they represent significant progress from October's multi-decade highs of over 8% for conventional 30yr fixed rates. For the same scenario, today's rates are down 5/8ths of a percent from those peaks.  For the bond market that underlies and dictates day-to-day rate movement, it is shaping up to be an uneventful couple of weeks.  Surprises are always possible, but without them, there isn't much on the calendar of scheduled events that would cause a big reaction in rates.

  Mortgage Rate Watch

 2 weeks 2 days ago

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Mortgage Rates Nearly Unchanged At Recent Lows
The average mortgage lender was fairly close to their lowest levels of the past 2 months by yesterday afternoon and today saw almost no change.  That's a departure from the recent trend of larger movements, but also an expected shift given the absence of big ticket economic data. Big ticket data refers to the scheduled economic reports like the Consumer Price Index (CPI) which was responsible for the largest portion of this week's improvement and Retail Sales which pushed back in the other direction the following day. Thankfully, Retail Sales wasn't nearly up to the task of spoiling the good times for interest rates this week.  The next data with the power to help or hurt in any major way won't arrive until the first full week of December.  In the meantime, the baseline scenario is for lower volatility in a more sideways trend.   The only caveat is that Thanksgiving week can occasionally see very random volatility that is not connected to underlying events or data.  This is a byproduct of the less robust trading environment on major holiday weeks.  All that to say, even if it seems that rates are on the move next week, it could just be an illusion that requires confirmation or rejection 2 weeks later.

  Mortgage Rate Watch

 2 weeks 5 days ago

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Mortgage Rates Drop Back in Line With Recent Lows
After a fantastic day on Tuesday and frustrating little bounce after yesterday's Retail Sales data, mortgage rates have fully recovered back to the recent lows. Any time rates move enough to merit a discussion, it coincides with a similar move in the broader bond market.  Bonds are currently highly susceptible to economic data (as seen on Tue/Wed).  Whereas Wednesday's data pushed bond yields and interest rates higher, Thursday's data sang a different tune. weekly Jobless Claims (not to be confused with the big monthly "jobs report" that comes out on the first week of any given month) were higher than expected and several other reports also spoke to a modest uptick in economic headwinds.  The economy may not like headwinds, but what's bad for the economy is generally good for bonds/rates.  Today was no exception. As bonds erased all of yesterday's losses, interest rates moved back in line with best recent levels.  For some lenders, that was Tuesday.  For others, it was last Friday. This leaves the average lender at the lowest levels in almost 2 months.  Top tier conventional 30yr fixed scenarios are safely back below 7.5%, but safety can only be assessed one day at a time in this market.  That said, rates won't get their next dose of critically important data until the first week of December.

  Mortgage Rate Watch

 2 weeks 6 days ago

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Mortgage Rates Bouncing Back a Bit After Tuesday's Big Drop
The story of the week for mortgage rates continues to be the substantial drop seen on Tuesday in response to the Consumer Price Index (CPI). But that story is a bit less epic and exciting after today's Retail Sales data. Retail Sales was the only other economic report this week that was remotely as important to rates as CPI.  Thankfully, it's not AS important or we might be seeing a bigger bounce today.  As it stands, Retail Sales beat forecasts by 0.2%--a margin that could be considered too large to be inconsequential and too small to be highly significant. For the bond market, it was worth unwinding about half of yesterday's improvement, but mortgage-specific bonds fared a bit better than US Treasuries. The average mortgage lender moved up less than an eighth of a percent and remains closer to the bottom of this week's range. Between now and the first full week of December, there are no other economic reports or scheduled events with the same potential energy as those seen over the last 2 days.  That doesn't mean rates can't move higher or lower--only that such movement would not be easy to line up with specific times on specific days.  

  Mortgage Rate Watch

 3 weeks ago

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Huge Drop in Mortgage Rates After Friendly Inflation Data
November 3rd's jobs report brought an outstanding week for Treasuries and mortgage rates to an outstanding conclusion.  From there, the following week (last week) was sorely lacking in inspiration.  Markets were anxiously awaiting today's release of the Consumer Price Index (CPI) and it did not disappoint.   If we had to pick the single, biggest consideration for interest rates these days, it would surely be inflation. CPI is the biggest market mover among the inflation reports and this one left no doubt.  By merely coming in 0.1% lower than expected for the month, CPI sparked one of the biggest single-day bond market rallies since last year (incidentally also due to a CPI report in November 2022). While this is important confirmation of the prospective shift away from the recent rate ceiling, there are other economic reports and other factors that could make for a bumpy road on the way down.  In fact, we should keep in mind that there have been a few "false starts" in rates that have looked quite a lot like the past few weeks only to give way to another surge toward higher highs.   Either way, it will be the balance of economic data and the Fed's response to that data that will do the most to dictate the broader trends in rates.  On that note, tomorrow morning brings more important reports.  The Producer Price Index and Retail Sales are certainly not on the same level as today's CPI, but if they speak loudly enough and in unison, they could add momentum to today's improvement or make a case for more consolidation before rates move any lower (equivocal, but accurate). 

  Mortgage Rate Watch

 3 weeks 1 day ago

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Mortgage Rates Start Higher But Recover Ahead of Key Inflation Report
Mortgage rates began the day at the highest levels in nearly 2 weeks.  The underlying bond market had been losing ground steadily since last Thursday and there was some follow-through to that negative momentum early today.  Weaker bonds = higher rates, all other things being equal. But bonds recovered from 10am through the end of the day and the specific bonds that underlie mortgage rates did even better than their Treasury benchmarks.  This allowed almost every lender to issue updated, improved pricing in the afternoon.  With that, lenders were fairly close to the rate offerings seen on Friday. All bets are off as far as tomorrow is concerned.  The Consumer Price Index (CPI) will be released at 8:30am ET and it has the power to send rates sharply higher or lower depending on the outcome.  CPI is the most important inflation report for the bond market and one of the only pieces of economic data that can rival the big jobs report when it comes to market movement potential.  The key word here is "potential."  CPI can always thread the needle and garner a mixed response in the market, but if it's significantly higher or lower than expected, rates will be on the move.

  Mortgage Rate Watch

 3 weeks 2 days ago

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Everything's Relative, And Rates Had a Relatively Good Week
While it's possible to accuse mortgage rates of experiencing volatility over the past few days, this week was exceptionally calm compared to last week.  So "everything's relative," and relatively speaking, that's a win. Here's a snapshot of the action as told by 10yr Treasury yields, which tend to be moving in the same direction as mortgage rates: As the chart points out, Thursday's 30yr bond auction brought this week's only instance of excess volatility.  This refers to The Treasury Department's regularly scheduled auctions of US debt--some of the only interesting items on this week's event calendar as far as rates were concerned. In general, Treasuries are the tour guides for the bonds that drive mortgage rates (MBS or mortgage-backed securities).  They tend to hang out closer to the tour bus while MBS go off in search of adventure, but everyone is generally moving to the same places at the same time. In other words, a big, volatile jump in Treasury yields often suggests the same for mortgage rates.  Fortunately, this particular jump wasn't that big, and the 30yr Treasury bond is less correlated with mortgage rates than 5 or 10yr Treasuries.  The result was only a modest increase in rates on Thursday and not one that erased too much of the recent improvements. Of course we should remember that everything's relative... The chart above is not intended to rain on any parades, but merely to put them in context.  It shows 3 previous instances of rates appearing to top out and push back against long term highs only to be persistently dragged higher.  All that to say: it's promising to see rates mostly holding last week's improvement, but as far as long journeys go, it's best viewed a solid first few steps.

  Mortgage Rate Watch

 3 weeks 5 days ago

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Mortgage Rate Rally Finds Its Limit For Now
It was a great run for mortgage rates over the last 2 weeks with a sharp decline last week followed by very respectable ground-holding in the present week.  But things got less respectable today.  Bonds (which underlie day to day rate momentum) began the day in only moderately weaker territory before tanking hard in the afternoon.  Said tankage was the result of an appallingly weak 30yr Treasury auction. We discussed Treasury auction implications a bit yesterday, but the gist is that a bad Treasury auction is bad for rates.  It's that simple and today's Treasury auction was very bad.  There's nothing too dramatic underlying the bad showing.  If anything, it's just confirmation that rates have managed to come a long way (lower) very quickly and that it's time for them to cool off and consolidate before the next move. Anything can happen on any given day, but the "next move" stands the best chance of getting some guidance after next week's Consumer Price Index (CPI) on Tuesday morning.  This is a key inflation report that has been responsible for some of the biggest moves we've seen in rates in the past 2 years. As for today, the average mortgage lender was only moderately higher in the morning, but most lenders made mid-day adjustments that left them sharply higher compared to yesterday afternoon.

  Mortgage Rate Watch

 3 weeks 6 days ago

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Mortgage Rates Continue Cautiously Lower
There have been more than a few days in the recent past with absolutely massive day-over-day swings in mortgage rates.  In fact, on each of the first 4 days of the month, mortgage rates changed by more than 0.10%--which is a relatively large move even when it shows up all on its own. But the volatility is dying down quickly in the current week--not in a bad way, either.  Putting Monday's corrective spike aside, the past two days have seen the average 30yr fixed rate fall by a total of less than 0.10%. Perhaps it is even more notable that the bond markets that underlie rate movement managed to have a calm and orderly reaction to the week's most anticipated scheduled event: today's 10yr Treasury auction. Treasuries are often said to be the benchmark or basis for 30yr fixed mortgage rates.  While that's not perfectly true, it is true that mortgage rates often move in the same direction as the 10yr Treasury yield and in relative proportion.  The implication is that any big news for 10yr Treasury yields could have also been big news for mortgage rates.  Auction results CAN be big news, but today's was just "pretty good" news.  It allowed 10yr yields and mortgage rates to hold on to the moderate gains that were already intact.  

  Mortgage Rate Watch

 4 weeks ago

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Modest Recovery For Mortgage Rates
After one of the best 3-day winning streaks in decades last week, mortgage rates jumped a bit to start the new week.  That jump turned out to be a temporary correction as Tuesday brought a mild recovery.   Rates are determined by trading levels in the bond market and bonds take cues from many sources.  On many trading days, the initial tone is set by overseas trading that takes place overnight.  That was the case today as weak economic data in Europe put downward pressure on rates globally. During domestic hours, things didn't change much.  Agreeable comments from Fed speakers allowed bonds to hold the overnight gains.  At 1pm ET, strong demand at the 3yr Treasury auction helped bonds improve a bit more. The average mortgage lender was able to offer rates that were slightly better than Monday's, but still not as low as Friday's.

  Mortgage Rate Watch

 4 weeks 1 day ago

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Mortgage Rates Erase Some of Last Week's Huge Improvement
In and of itself, today would rank among the handful of "worst days" of any given year in term of mortgage rate movement.  In other words, comparing today's rates to Friday's shows a big jump relative to the average day.  Specifically, most lenders are offering rates that are at least an eighth of a percent (.125%) higher versus Friday morning. All that having been said, this is a prime opportunity to "put things in perspective."  Here's how the rate index chart looks after today's "big" losses. In other words, the bond market retains much of what it gained last week.  These sorts of corrections are common in situations like this.  They don't tell us much about the future.  If anything, it's more of a confirmation that last week's drop was as big and impressive as it seemed at the time. In the coming days, we'll see whether this is the start of a deeper give-back or just a token bounce after a huge move.  The US Treasury auction cycle is one of the only sources of guidance on the calendar when it comes to rate momentum this week.  Auction results are announced at 1pm ET on each of the next 3 days and that could lead to more volatile bond trading shortly thereafter (volatile bond trading, in turn, leads to changes in mortgage rate offerings--sometimes even in the middle of the day).

  Mortgage Rate Watch

 1 month ago

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From 8% to Under 7.5%, Mortgage Rates Had a Near-Record Week
The average top tier 30yr fixed mortgage rate was over 8% as recently as October 19th.  At the start of the present week, things weren't much better at 7.92%.  What a difference a few days make--especially the last 3.  The improvement seen on Wed-Fri is the 3rd biggest in well over a decade.  And if we throw out March 2020 (as we often do, due to unprecedented volatility relating to the onset of the pandemic), we're left with only one other example back early November of 2022. So is this some kind of seasonal pattern?  You'd be forgiven for drawing that conclusion, but in both cases, rates had recently surged to new long-term highs and then encountered surprisingly friendly economic data.  Last November it was a low reading in the Consumer Price Index (CPI) that gave investors hope regarding a shift in inflation.  Unfortunately, that shift proved to be a head-fake and rates continued lower into February of 2023, it's been up, up, and away since then. This time around, scheduled data gets the credit again, but there's a more robust assortment.  The good times began to roll on Wednesday after Treasury announced lower-than-expected auction amounts (lower supply of bonds relative to expectations means lower rates, all other things being equal).  The rally gained momentum with economic data at 10am and again with the Fed announcement in the afternoon.  Thursday was mild by comparison, but kept the trajectory intact with help from slightly higher Jobless Claims data, and especially from traders exiting bets on higher rates.  In the bond market, the simple act of "no longer betting on higher rates" forces a trader to effectively enter a bet on lower rates.

  Mortgage Rate Watch

 1 month ago

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Best 2 Days For Mortgage Rates Since March Ahead of Jobs Report
The stratification of rate offerings between lenders is very high due to rapid changes over the past few days and weeks.  On average, top tier conventional 30yr fixed rates have fallen more than 3/8ths of a percent since Tuesday afternoon.  You'd have to go back to the days following the failure of Silicon Valley Bank in March to find a bigger drop in mortgage rates over a 48 hour time frame.  That is quite something and perhaps even a bit of a puzzler given the underlying data and events driving the current move. To be fair, we can talk about several important reasons for the rate movement, but suffice it to say that if we had to guess how the underlying events would affect rates without actually getting to see the move in rates, our guess would have been much smaller. All of that may be at moot point because Friday's jobs report will now serve as a deciding vote on whether the rate rally was/is overdone.  At least it CAN serve as that deciding vote if the numbers come in far enough from forecasts. The bond market (which dictates rates) has a long history of volatile reactions to certain economic reports and the jobs report is certainly the most reliable in that regard.  Although the unemployment rate is the easiest number in the report to understand from a logical standpoint, it's actually the count of nonfarm payrolls (NFP) that carries the most weight. Economists expect NFP to come in at 180k.  Sometimes the consensus is very close to reality.  Other times, reality can "beat" or "miss" by 100k or more.  In the case of a big miss (NFP under 100k), it's fair to expect the recent rate rally to hold its ground or go even farther.  In the opposite case (NFP closer to 300k), much of the progress seen over the past 2 days could be wiped out in a matter of minutes.

  Mortgage Rate Watch

 1 month ago

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Mortgage Rates Surge Lower After Fed Announcement, But Not Necessarily Because of It
Today was "Fed day" and mortgage rates fell quite a bit.  So it must have been due to the Fed announcement, right?   Not exactly... The Fed helped, but more so by getting out of the way for a bond market that was already rallying.  Let's talk about what all that means. "Fed day" means that today was one of 8 scheduled announcements by the Fed regarding monetary policy.  At the simplest level, this just means they'll announce a change or no change in the Fed Funds Rate.  The market didn't expect a change today and it didn't get one.    Beyond the rate announcement, there's also a press conference with Fed Chair Powell where the market can glean clues about future Fed moves.  Little changed there and Powell didn't say anything materially different than his last public appearance.  Perhaps traders were concerned that some of the recent data would have the Fed thinking more about hiking short term rates and the positive reaction was akin to a sigh of relief. Even then, it wasn't really the Fed reaction that helped rates the most.  Mortgage rates improve when bonds rally and bonds rallied most sharply in the AM hours after a series of economic reports.  The data was either in line with expectations or weaker, and low rates love weak data.   There was also a more detailed update from Treasury regarding auction amounts.  Treasury auctions determine the "supply" of a Treasury securities, and that supply has a critical impact on interest rate momentum.  It's a bigger deal for Treasuries than for the bonds that dictate mortgage rates, but the two are very closely correlated.  

  Mortgage Rate Watch

 1 month ago

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