Here We Go Again: Mortgage Rates Making Another Recovery Attempt

In a normal mortgage rate environment, it's common to see a remarkably equal distribution of good and bad days with rates moving lower or higher  versus the previous afternoon.  With 21 days in the books for March, today was just the 4th time this month where rates have fallen.

The first decline on March 4th was a part of the initial market volatility in response to Russia's full invasion of Ukraine. We had to wait until March 18th for the next drop.  Due to that wait, we were cautious about reading too much into the improvement.  The bond market tends to find a way to correct after so many successive days of losses.  

Sure enough, rates continued moving significantly higher last week, but the 3rd winning day for rates (last Wednesday) was big enough to keep hope alive.  Actually, it was hopeful because rates didn't change much on Thursday.  This was the first time since the volatility early in March where rates ended lower over a 2-day time frame. 

Last Friday ended up providing a sobering reminder about getting our hopes up as rates surged up toward 5%.  This also made last week the worst since June 2013 and the 2nd worst in more than 25 years.  

Now today, we have another improvement in the bond market that looks quite similar to the one seen last week.  This one arose due to hopes for some sort of de-escalation in Ukraine.  The thought process is that de-escalation helps oil prices drop, thus easing upward pressure on inflation and allowing the Fed to be slightly less aggressive in making policy changes that are unfriendly to rates.

If recent instances of hope and the subsequent crushing of those hopes are any guide, this could certainly be another head fake.  There's no way to tell how likely that is.  What we can say is that it would take several more days with bigger improvements to alter the broader rising rate trend.

The average lender was closest to 5.0% on Friday and Monday for top tier conventional 30yr fixed scenarios.  Today's number is closer to 4.875% for the same scenarios.