- The average contract interest rate for 30-year fixed-rate mortgages increased to 2.98% from 2.96% last week.
- Total mortgage application volume fell 5.1% last week from the previous week, according to the Mortgage Bankers Association.
- Applications to refinance a home loan fell 5% for the week.
- Mortgage applications to purchase a home fell 6% for the week.
- Updated 2021
A simple one-day surge will only cause the few buyers who have a property right in front of them to hurry up and buy it. If rates continue into the 3s, it will affect everybody.
Recovery prospects, a renewed focus on stimulus, inflation concerns, a brighter covid outlook, etc… All of these are reasons for an ongoing, gradual trend toward higher rates in 2021 (i.e. general bond market weakness) but none of them really explain why the bond market had its worst day in months today specifically. Still, pundits are pointing to the laundry list of usual suspects to explain the move. In their defense, that’s all anyone can really do on a day like today. At a certain point, market momentum becomes its own justification, and bond prices snowball to lower and lower levels.
When bond prices fall, rates rise–a fact which is abundantly clear in comparing today’s rates to those seen late last week. The average lender is quoting conventional 30yr fixed rates that are roughly 1/8th of a percent higher, and that’s a huge move for a single trading day.
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