Mortgage interest rates edged higher again today, and the 10 Year Treasury is at its highest level since late March.
Rates edged higher largely in response to a stronger than expected employment report; unemployment was expected to hit 20% but was instead at 13.3%.
So, we are back to “normal” to some extent b/c mortgage rates are increasing once again in response to stronger than expected economic news. As a reminder, in “normal times,” weak economic news usually portends lower rates (partially b/c the Fed is less likely to try to push rates up), and strong economic news usually portends higher rates.
In any case, for the last few months, rates would simply bounce around for reasons that could often not be explained.
There are a few takeaways here:
- The Fed does not control mortgage rates. This a reminder I share often, as mortgage rates often move in directions opposite of the Fed’s desire. The Fed clearly wants to keep mortgage rates as low possible right now, for example, but they have edged up anyway.
- Rates could still fall much further. The spread between the 10 Year Treasury and mortgage rates remains about 1% higher than normal, so we could still see rates fall as more certainty returns to the mortgage market and that spread begins to approach normal levels again.
- Could rates continue to climb? Possibly, if the economy continues to rebound. But, with the Fed so determined to keep rates down via Fed policy and mortgage-backed security purchases, and despite its loss of power over rates, I think it is unlikely that they will climb much further.
The biggest takeaway here is that there is no guarantee that rates will continue to fall.
So, once again, everyone who can refinance or lock in their purchase mortgages now, probably should.
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