Mortgage Rates Stay Sideways Despite Bond Market Gains

Mortgage rates didn’t move much today, if at all.  This is confounding to all those who have watched rates against the backdrop of 10yr Treasury yields (and especially those who don’t qualify their view that “mortgage rates follow the 10yr Treasury yield.”  Indeed, such a view must always be qualified with a word like “generally” or “typically.”  Today offers proof with 10yr yields significantly lower (more than 0.05%) whereas the average mortgage lender is unchanged.
What’s up with this?
It is true that the bond market does more than anything to dictate mortgage rate movement.  While 10yr Treasuries tend to correlate very well with the bonds that underlie mortgages, that correlation can periodically break down.  When we look at actual mortgage-backed securities (MBS), we see they didn’t fare nearly as well today as Treasuries.  So this is a purely market-driven move for mortgage lenders (because they are almost exclusively concerned with MBS prices as opposed to Treasuries).  The reasons for this are complicated, but temporary. …(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.
Source: mortgagenewsdaily.comNew feed