The Sting vs. The Honey: A Realistic Look at Mortgage Rates This Week

Remember last week? We were riding high on the excitement of significantly lower mortgage rates. It felt like the market had finally turned a corner.

Well, let this week serve as a reminder that in the financial world, sometimes good things don’t last long. We are feeling a bit of a sting today, and dreaming of tasting that sweet honey again soon.

But before we panic about rising rates, we need to keep things in perspective.

Watch This Week’s Market Update (And See Me Literally Get Stung!)

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The Honey: Keeping Perspective

It’s easy to focus on the immediate pain of rates ticking up. But if we take the last five days out of the equation, today’s mortgage rates are still in range of the lowest levels we’ve seen since early 2023.

The sting comes from the fact that they spent most of those last five days moving up from even lower levels.

The Sting: Why Aren’t Rates Dropping Further?

What factors are determining these future moves? Mortgage bonds care about several things, but right now, one of the biggest factors is Treasury issuance.

Because the government is currently spending at high deficit levels, they have to issue more Treasuries to fund it. That massive supply of Treasuries prevents mortgage rates from dropping anywhere close to the record lows we saw in 2020–2022. Unfortunately, government spending habits are not something that changes quickly.

Other Factors to Watch

If other factors align, there could still be meaningful improvement. The other major players are inflation and the jobs market.

We received data on both over the last week to ten days. While neither report was strong enough to do a lot of harm to mortgage rates, neither are falling quickly enough to constitute major tailwinds for mortgage rates right now.

The Takeaway

If you are in the market for a home loan, remember that rates are still historically low compared to the last year, but they can move at any time. We shouldn’t take the dips for granted.

Let’s hope for a little less sting and a lot more honey next week.