Weekly Mortgage Market Update: Mortgage Rates Didn’t Fall as Much as The Market Suggested
The good news: mortgage rates ended the week at the lowest levels in more than a month.
The puzzling news: mortgage rates fell only modestly on Friday even though the bond market said they could have fallen more.
Mortgage lenders consider several factors when deciding where to set mortgage rates. By far and away, the bond market is the most important of those factors. But sometimes rates don’t do exactly what the bond market suggests. Friday was a classic example.
First off, let’s validate our correlation claims by looking at the following chart. It shows MND’s daily mortgage rate index on the left axis and the bond market on the right axis. Since “the bond market” is a fairly broad term, this chart uses the mortgage backed security (MBS) that lenders use to determine rates.
(Note: MBS trade in “price” and interest rates move in “yield.” Since price varies inversely to yield, the right axis in the chart is inverted in order to highlight the correlation. Otherwise it would just look like a Rorschach test).
In other words, it’s clear we’re looking at the right part of the bond market. Now let’s zoom in to a more granular view to see how we might account for Friday’s fairly small drop in mortgage rates despite a larger movement in the bond market.
Simply put, the mortgage market almost never moves as quickly as the bond market suggests–especially on the way toward lower rates.
Based on that chart, you may be wondering if rates will fall next week in order to catch up to that blue line. Unfortunately, mortgage rates almost never move lower if bonds say they should move higher. For example, if the blue line bounces next week, the red line would almost certainly bounce too, but maybe not as much.
Bottom line: next week’s rate direction will still be determined by the direction of movement in the bond market. In turn, that will likely be determined by the disposition of the Iran war, which has been the dominant driver for the entire financial market in recent weeks. The more “over” the war is (and the more the Strait of Hormuz is “open”), the better the odds of lower rates. Conversely, if there are hiccups in the peace process, rates could still bounce higher.
What Does This Mean For Home Purchase and Refinance Clients?
If you are buying or refinancing in Raleigh or anywhere across North Carolina, small rate shifts can create real opportunities when you act with the right strategy. Certified Home Loans helps you lock in the right loan for your situation, whether you need Conventional, FHA, VA, USDA, Jumbo, or Non-QM financing. Get clear guidance, competitive options, and a plan built around today’s market by connecting with our team at 919-510-1108.
Recently Released Economic Data
| Time | Event | Period | Actual | Forecast | Prior |
|---|---|---|---|---|---|
| Monday, Apr 13 | |||||
| 10:00 | Exist. home sales % chg (%) | Mar | -3.6% | 1.7% | |
| 10:00 | Existing home sales (ml) | Mar | 3.98M | 4.06M | 4.09M |
| 18:20 | Fed Miran Speech | ||||
| Tuesday, Apr 14 | |||||
| 8:30 | PPI y/y | Mar | 4% | 4.6% | 3.4% |
| 8:30 | PPI m/m (%) | Mar | 0.5% | 1.1% | 0.7% |
| 8:30 | Core PPI m/m (%) | Mar | 0.1% | 0.5% | 0.5% |
| 8:30 | Core PPI y/y (%) | Mar | 3.8% | 4.1% | 3.9% |
| 12:15 | Fed Goolsbee Speech | ||||
| 12:45 | Fed Barr Speech | ||||
| 13:00 | Fed Collins Speech | ||||
| Wednesday, Apr 15 | |||||
| 8:30 | Fed Barr Speech | ||||
| 8:30 | NY Fed Manufacturing | Apr | 11.00 | -0.5 | -0.20 |
| 13:45 | Fed Bowman Speech | ||||
| Thursday, Apr 16 | |||||
| 8:30 | Jobless Claims (k) | Apr/11 | 207K | 215K | 218K |
| 8:30 | Continued Claims (k) | Apr/04 | 1818K | 1810K | 1794K |
| 8:30 | Philly Fed Business Index | Apr | 26.7 | 10 | 18.1 |
| 8:35 | Fed Williams Speech | ||||
| 9:15 | Industrial Production (%) | Mar | -0.5% | 0.1% | 0.2% |
| 10:35 | Fed Miran Speech | ||||
| Friday, Apr 17 | |||||
| 12:15 | Fed Barkin Speech | ||||
| 14:00 | Fed Waller Speech | ||||
Upcoming Economic Data
| Time | Event | Period | Actual | Forecast | Prior |
|---|---|---|---|---|---|
| Tuesday, Apr 21 | |||||
| 8:30 | Retail Sales (%) | Mar | 1.3% | 0.6% | |
| 8:30 | Retail Sales Control Group MoM | Mar | 0.5% | ||
| 10:00 | Pending Home Sales (%) | Mar | 0.5% | 1.8% | |
| 10:00 | Business Inventories (% ) | Feb | 0.1% | -0.1% | |
| 14:30 | Fed Waller Speech | ||||
| Thursday, Apr 23 | |||||
| 8:30 | Continued Claims (k) | Apr/11 | 1818K | ||
| 8:30 | Jobless Claims (k) | Apr/18 | 212K | 207K | |
| 9:45 | S&P Global Manuf. PMI | Apr | 52.3 | ||
| 9:45 | S&P Global Services PMI | Apr | 49.8 | ||
| 9:45 | S&P Global Composite PMI | Apr | 50.3 | ||
| Friday, Apr 24 | |||||
| 10:00 | Consumer Sentiment (ip) | Apr | 47.6 | 53.3 | |
| 10:00 | Sentiment: 1y Inflation (%) | Apr | 4.8% | 3.8% | |
| 10:00 | Sentiment: 5y Inflation (%) | Apr | 3.4% | 3.2% | |
| 10:00 | U Mich conditions | Apr | 50.1 | 55.8 | |
