Mortgage Rates Remain Over 4%

It's Thursday and thus time once again for the weekly installment of Freddie Mac's Primary Mortgage Market Survey.  For the 2nd time this year, Freddie's 30yr fixed survey rate rose by 0.23%.  If we disregard the extreme market volatility in March 2020, we'd have to go all the way back to late 2016 to see rates rise this much in a single week.  If we look at the 7 weeks since the most recent rate spike began in earnest, we'd have to go all the way back to 2013's taper tantrum to see a bigger move.  

The point is that rates have moved higher abruptly--so abruptly in fact that Freddie's weekly survey is still trying to catch up with reality.  Specifically, Freddie's survey says top tier 30yr fixed rates are 3.92% today.  Granted, that is a rate that can exist today, but it's certainly not the "going rate."  It should also be noted that even in Freddie's survey, such a rate required 8/10ths of a point upfront. 

Adjusting for upfront costs, that would put the effective rate closer to 4.09% which is actually not too far from reality.  Just be aware that this has been the reality for more than a week now when it comes to daily mortgage rate offerings.  The weekly survey data is finally getting caught up.  Also be aware that almost any discussion of such rates will assume best case scenarios at competitively-priced lenders.  Many borrowers with less than perfect scenarios are already seeing rates well into the 4's.  

As has been and continues to be the case, a shift in the Federal Reserve's policy outlook in Dec/Jan is primarily responsible for the pace of rising rates over the past 7 weeks.  Events like the geopolitical tensions in Ukraine have given pause to those rising rate impulses, but those effects almost always prove to be fleeting in the bigger picture.