Mortgage Rates Inch Back Up Toward Tuesday's Highs, but Hope and Risk Remain

Tuesday (March 22) saw mortgage rates at their highest levels since late 2018 with top tier conventional 30yr fixed scenarios being quoted 4.75% by the average lender.  Yesterday brought the first significant recovery to the bond market in several weeks with mortgage rates moving lower for only the 2nd time since March 4th.

Days like yesterday fuel hope that rates had risen high enough, fast enough for the market to begin to find some equilibrium.  While none of the recent examples were quite as big, they all proved to be false starts.  When traders and mortgage pros woke up this morning to check the bond market, it was clear we were looking at another false start... probably.

Why "probably?" 

Because sometimes these rate plateaus take days or even weeks to play out.  In those instances, there are moments where all hope looks lost and other moments when we wonder why we ever doubted the outcome.  To be sure, we're very far from being able to confirm that rates are still attempting to establish a ceiling, but at the very least, we do know that today's rates are no higher than Tuesday's.  Technically, that fact means hope remains alive, even if we wouldn't suggest changing any lock/float strategies because of it.

In general, the rule at times like this is to assume the rising rate trend will continue until there's overwhelming evidence that it's over.  That sounds simple and logical, but the downside is that by the time "overwhelming evidence" can be confirmed, rates have usually already fallen a decent amount, thus making some people feel regret their rate lock decisions of the previous weeks.  Nonetheless, that's the safe way to play it. 

The risky way would be to catch the falling knife (by waiting to lock in the hopes that the market is turning a corner).  Again, there have been several apparent opportunities to do that recently (with the most tempting instance being at the end of last week).  Anyone who tried to catch that particular knife ended up needing first aid this week.  Maybe this time will be different, but we won't know until we spend 2-3 weeks without breaking above the recent highs.