Surprising Twist Improved Mortgage Markets Last Week

Quick Lesson in Rate Momentum

Mortgage markets improved last week, in large by two days of out-sized gains. Mortgage rates bounced off their 8-week highs on much weaker-than-expected inflation data (yes, seriously…), and debt concerns abroad (less surprisingly…).

It was an abrupt change in mortgage rate momentum.

Since the Federal Reserve’s March 2011 meeting, in which the Fed said rising energy costs are “putting upward pressure on inflation“, inflation chatter has figured big for mortgage rates in Iowa. With each tick higher in gas prices; in every conversation on U.S. debt load; as fruits and vegetables get more expensive at the supermarket, Wall Street’s fears of inflation have grown, and rate shoppers have suffered.

The connection between inflation and mortgage rates is straight-forward. Inflation is the devaluation of the U.S. dollar — the currency in which mortgage bonds are denominated. As the dollar loses values, so do mortgage bonds, therefore, leading mortgage rates to rise. Wild how it’s all so closely tied, right?

Leading up to last week, concerns peaked and rates did, too. And then, a strange thing happened. The government’s March inflation report showed inflation well under control. Good news for mortgage rate shoppers though!

The results surprised Wall Street and the trades that had previously served to pump rate up, last week, ran in reverse.

The biggest gains were made Friday. If you happen to still be waiting to lock in an interest rate, now might be a good time to re-evaluate your options. If you’re not currently working with a loan officer (or if you’d like a 2nd opinion), reach out to me. I’d love to help you out. You can email me at Tyler@TylerOsbyTeam.com or call me at 515-257-6729. I love to help my readers with their mortgages.

Specifically, What Did Those Reports Say?

Each week, I put up an economic calendar of news coming out that following week. Here’s the what actually happened with those reports last week:

What Impacts Mortgage Rates?

If you’re looking to purchase or refinance a home, it’s important to know what moves mortgage rates. There are normally two major things that impact the direction:

Economic News. (Like the calendar above).
International News. (major events, pending legislation, war related news, etc).
Stock Market. (Money flows from equities (stocks) to bonds when it seeks shelter).

What Are Rates Based On?

It’s been mentioned before, but as a common reminder – mortgage rates are only based on one thing, Mortgage Backed Securities (MBS). The only way you have access to these is through live bond quotes.

Looking For Mortgage Rates?

If you’re looking for specifically what mortgage rates are doing, I’d be happy to help with a custom rate quote. Each scenario is different (there are 27 different factors a mortgage rate is determined by). If you or someone you currently know are looking for a mortgage, I’m here to help!

Information without obligation. That’s my policy. If you like what you hear, my team and I would love to help you out with your mortgage! Our contact information is on the top right hand side of this page!