Mortgage Rates Officially Hit 2 Month Lows

The bond market that underlies mortgage rates has had several decent days in a row with trading levels in excellent territory relative to the past two months and minimal volatility day-over-day.  Today added to the winning streak amid another lack of meaningful economic data and an absence of any new news in the scheduled release of the minutes from the Fed's policy-setting meeting 3 weeks ago.

In this sort of "holiday light" trading environment, bonds are still moving, but those movements are a bit more random and the range is a bit narrower.  Today could have gone either way.  If bonds had lost ground, the average mortgage lender might have quoted microscopically higher rates.  But because the random drift resulted in modest bond market improvement, the average mortgage lender was able to offer slightly lower mortgage rates compared to yesterday.

This is a bit of a short-term milestone due to the fact that yesterday's rates were right on the cusp of officially breaking the lowest levels in 2 months.  As such, today's improvement makes it official.  You'd have to go back to September 20th to see anything lower.

In the even bigger picture, any progress at this stage helps to build the sense that the highest rates are behind us and that the bond market is cautiously considering a long, slow descent back to levels that should be a lot more palatable to the housing market.  It's WAY too soon to confirm such things, but at least we can say that the past month would certainly fit the pattern of a long-term ceiling. 

We'll be waiting at least until the first week in December to see if the big ticket economic data agrees that rates should continue cooling or if it makes a case for revisiting recent ceilings.  In specific terms, "recent ceilings" suggest rates at 8% or more for conventional 30yr fixed scenarios while "continued cooling" connotes additional progress toward 7%.