Mortgage Rates Are Actually Lower This Week

Mortgage rates moved a bit lower today, on average, but that's not what most of the mortgage-related headlines are saying today.  Reason being, journalists and even many mortgage market participants rely heavily on Freddie Mac's weekly survey for a regular update on mortgage rate trends.  The survey says rates are slightly higher.  That was a true story a few days ago, but it's old news at this point.

Freddie's survey mostly tracks Monday's and Tuesday's rates and it completely ignores Thu/Fri rates.  In the current cycle, last Thursday was the worst day in a long time (by far). It wouldn't have taken much of a recovery for rates to be lower this week, even though they remain higher than they were at the beginning of last week.  Compared to Thursday and Friday, however, the average lender is in much better shape today.

Whereas interest rate movement is traditionally driven by things like economic reports and Fed policy, the most recent volatility has almost everything to do with last week's policy change announced by Fannie and Freddie (the impositions of a new guaranty fee).  That announcement took the industry by surprised and caused lenders to rapidly adjust mortgage rates in the 2nd half of last week.  As they come to terms with the change, rates have begun to settle, even though we don't expect them to quickly return to the previous lows.