Mortgage rates continued higher this week as weather-related effects on financial markets deprived interest rates of one of their primary sources of support. This is the second straight week of increases and the 3rd week with no improvement. Before that, rates had fallen for 5 straight weeks.
In terms of the most prevalently quoted conforming 30yr fixed rate for ideal scenarios (best-execution), both 4.375% and 4.5% were in play this week with 4.5% taking over by Thursday.
Unfortunately, there’s no perfect way to separate weather-related distortions from reality, and this is currently serving to keep the range of movement relatively narrow for mortgage rates and US Treasuries. Also unfortunate is the fact this weather dynamic creates something of a no-win situation for interest rates because only the negative data (which would help rates) is suspect due to weather, while positive data (which would hurt rates) would be seen as strong enough to overcome any weather-related drag.
That’s not to say rates can’t improve, but gains are limited, and more of a serendipitous by-product of market considerations that are not dependent on economic data. Strong data, on the other hand, could have a noticeable negative effect.
–Matthew Graham, Chief Operating Officer, Mortgage News Daily