The day began with so much potential–at least in the sense that it could have served as the foundation for slightly lower mortgage rates this afternoon. Rates are most directly affected by the bond market, and bonds finally had a decent night in Asia and Europe. Even after some early weakness, we were holding at levels that would have allowed lenders to bring rates down just a hair, and anything helps after the abrupt spike seen last Thursday and Friday (not to mention the bigger-picture abrupt spike that began in early January).
But alas! Although the bond market was sending reassuring signals as late in the day as 2pm ET, things deteriorated after that. By 4pm the friendly bond market messages had been erased, and with them, any hopes of friendly adjustments on mortgage lenders rate sheets today.
Tomorrow is a new day, but it may be heavily dependent on the morning’s economic data–specifically the Consumer Price Index (CPI) at 8:30am. This is a key inflation metric and inflation is a key concern for rates at the moment. Regardless of the outcome, the broader trend remains intact for rates and it won’t be significantly altered by one or two individual economic reports. The market is still in a state of repricing its expectations for Fed policy and the Fed would need to do or say something to change those expectations in order for the rate outlook to improve in a sustained and meaningful way.
As for today’s specifics, the average lender was actually not any worse than yesterday, but each day so far this week has seen the average 30yr fixed rate at its highest levels in more than 2 years.