When interest rates plummeted in response to the early realities of the pandemic back in March/April, mortgage rates did a terrible job of keeping pace with the broader bond market. When we talk about the “broader bond market,” things like 10yr Treasury yields come to mind. Over the years, 10yr yields and mortgage rates move with extraordinarily high correlation. There are huge exceptions, however, and the pandemic made for an extreme example.
Mortgages couldn’t keep up with the drop in Treasury yields for a variety of reasons, but it turns out to have been a good thing from today’s perspective. The underperformance of the past has allowed mortgage rates to outperform in the present. Despite 10yr yields rising quite clearly in October, mortgage rates have barely budged. Zooming into shorter time horizons we have days like today where Treasury yields are up just a hair while mortgage rates are actually DOWN just a hair!
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Source: mortgagenewsdaily.comNew feed
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