Mortgage rates improved microscopically today as the underlying bond market stayed uncharacteristically steady. Since the beginning of 2021, bonds have been exceptionally volatile with yields moving higher and prices moving lower. That’s a recipe for higher interest rates–something that was painfully obvious in February when the average mortgage lender jumped by half a percentage point in conventional 30yr fixed rates.
March saw rates move just a bit higher at first, but they’ve since leveled off–at least for now. The current week hasn’t done anything to jeopardize that stability so far, and that’s a welcome change of pace from almost every other week this year.
The big question is whether rates are truly leveling-off for an extended period of time or merely pausing for a few days or weeks before continuing higher. Sadly, those questions can’t be answered until the market shows its hand. Some would argue that this week’s Treasury auction cycle has increased the odds for near-term stability and possibly even a medium-term rate ceiling. Personally, I’d still like to see a bigger push back in a more rate-friendly direction to draw such conclusions.
Bottom line: this week brings a refreshing absence of pain for rates, but we’re still waiting for more evidence before counting on any significant improvement.