There have been some more abrupt rate spikes in the recent past–days where the average mortgage rate has risen by more than an eighth of a percent (the standard increment separating one mortgage rate from the next). Today was not one of those days.
But while rates were only modestly higher versus yesterday, they achieved the unfortunate distinction that’s been handed out in the past month more than in the past several decades combined. Specifically, today’s rates represent a new multi-decade high (23 years to be precise).
That achievement no longer has the shock value it once did. It’s just a thing that gives us another sentence to write. So let’s move on.
Today’s rate spike happened in spite of Fed Chair Powell confirming that the Fed is likely done hiking the Fed Funds Rate. To be fair, the Fed’s rate doesn’t dictate mortgage rates, nor does it even correlate very well much of the time. This is especially true right now when short term rates are higher than long term rates (i.e. inverted yield curve).
As the curve un-inverts (which we’d expect to see based on the Fed’s stance), it can happen in two ways: long term rates can rise more quickly than short term rates, or short term rates can fall more quickly than long term rates. Actually the 3rd and least common example are the days where short term rates fall and long term rates rise. That’s what we had today.
Mortgages tend to be caught in the middle when it comes to the benchmarks for “short and long” in the bond market (2yr and 10yr Treasuries, specifically). We didn’t lose as much ground as 10s, but we didn’t make any gains as seen in 2s.
The average lender is just a bit higher into the 8% range now for a top tier conventional 30yr fixed scenario.
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