Survey-based rate indices haven’t yet had time to account for the massive drop in mortgage rates this week, but rest assured, it was special. That’s no surprise if you saw our coverage yesterday, which pointed out that it was the biggest drop in a 45 day window that we’ve ever measured.
When rates drop that much, that quickly, there’s always some risk that we’ll see a corrective bounce. Sometimes such corrections only erase a small amount of the improvement over a day or two. Other times they can be the start of weeks of gradual increases. Either way, we usually have some indication of that resistance within a few days of the final crescendo.
This time, however, the mortgage rate drop is sticking the landing. Wednesday and Thursday were the big movement days and now today has seen almost no movement at all. The average lender is effectively right in line with yesterday afternoon’s latest levels.
While this turn of events can’t predict the future, it is a more reassuring set-up for the days and weeks ahead. Speaking of weeks, we probably won’t know what the next leg of this journey truly looks like until the 2nd week of January after the next Consumer Price Index (CPI) comes out.
Between now and then, the year-end trading process and the light participation among traders could make for counterintuitive movement that’s slightly bigger than it would normally be during the 2nd half of a month without any holiday absences.
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