Mortgage Rates at 2-Week Lows, But There's a Catch

Mortgage Rates at 2-Week Lows, But There's a Catch

Mortgage rates fell to their lowest levels in roughly two weeks this morning. That's a seemingly positive statement, but while it's true, there are also several catches. The first is that the recent range of rates has been exceptionally narrow, so it didn't take much of a movement to earn the "lowest in 2 weeks" designation.

The even more important caveat is that bond markets moved into weaker territory this afternoon. Let's examine why that's important. Mortgage rates are primarily driven by the bond market. When bonds are weaker, rates rise and vice versa. But mortgage lenders don't immediately change rate sheets every time the bond market fluctuates. It takes a certain amount of weakness to prompt lenders to 'reprice.' Today's level of weakness was just enough for a few lenders to raise rates in the middle of the day.

Any lender who didn't reprice will need to adjust tomorrow morning's rate sheets accordingly. Bottom line: all things being equal, mortgage rates begin tomorrow at a disadvantage (unless your lender already took their lumps today). Combine that with the potential volatility associated with Friday's big jobs report and it's easier to make a case for locking vs floating in the short term.