From Matthew Graham at Mortgage News Daily: Mortgage Rates Higher Despite Friendly Market Movement
Mortgage rates are largely dictated by movements in bond markets--specifically mortgage-backed securities (MBS). When bonds improve, prices rise and investors are willing to pay more to buy loans. This results in rates moving lower. In other words, bond market improvement = lower rates.Tuesday:
With all of that in mind, today is a bit of a paradox as the average lender is quoting slightly higher rates today, despite general improvements in bond markets. Nothing too terribly mysterious is at work here though. The inconsistency has more to do with the timing of Friday's market movements and the generally narrow range over the past four days. Specifically, bonds weakened progressively into Friday afternoon and most lenders never fully adjusted rate sheets to account for that weakness. This left the average lender at a disadvantage to begin the new week and today's gains in bond markets weren't enough to offset it.
The most prevalently-quoted conventional 30yr fixed rates remain in a range from 4.0%-4.125% on top tier scenarios. Most clients will not see any change in the "rate" side of the equation compared to Friday, thus implying moderately higher upfront costs.