Mortgage Rates Lower Today, But Volatility Remains a Risk
Mortgage rates moved lower today after starting the week by jumping noticeably higher yesterday. Today’s gains came courtesy of global growth concerns early in the trading session and a strong 10yr Treasury auction during domestic market hours. This morning’s mortgage rates weren’t too much better than yesterday’s, but several lenders offered mid-day improvements after the Treasury auction. Lenders who held firm would likely improve tomorrow morning unless overnight market drama undoes today’s gains.
Why do Treasury auctions matter to mortgage rates? Treasuries and MBS (mortgage-backed securities–the bonds that most directly affect mortgage rates) are both part of the bond market. They correlate quite well for a variety of reasons (not the least of which being that Treasuries are the risk-free starting point against which every dollar-denominated bond investment is measured). As such, when Treasuries have a good day, MBS (and thus, mortgage rates) tend to have at least a decent day. Today was no exception.
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