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June 1st, 2009

“Surprise Mortgage Rate Rise…Relax”

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According to the latest issue of HSH’s Market Trends Newsletter, “Surprise Mortgage Rate Rise…Relax,” don’t be surprised if improving economic conditions bring an upward influence to mortgage rates.

“Bond and mortgage markets spasmed this week, and the corresponding sharp rise in rates over a two-day period served as a reminder that even a battered private market markets can be a dangerous animal. It wasn’t completely clear what sparked the rout, but there was speculation that a combination of unclear goals in Federal Reserve quantitative easing programs, floods of new sovereign debt and shoddy treatment of GM bondholders all led to the selloff.”

“Yields on the influential 10-year Treasury bond had lifted by just over a half a percentage point in a few days’ time, rising from the low- to the upper-3% range and taking conforming fixed mortgage rates along for the ride. After standing at a familiar 5.03% on Tuesday, Conforming 30-year FRMs leapt to 5.29% on Wednesday and then 5.44% on Thursday before finally settling back some on Friday to 5.30%.”

“Overall, HSH’s Fixed-Rate Mortgage Indicator (FRMI), which includes rates for conforming, jumbo and “high-limit” conforming data, rose by only 18 basis points to 5.64%, as the increase in the conforming portion was tempered somewhat by a softer response in Jumbos. An all-inclusive average for 5/1 hybrids increased by 10 basis points, closing the survey week at 5.15%.”

“As markets move further away from emergency stances, and as “green shoots” of economic improvement (however premature) appear, we could see episodes like the above from time to time.”

Click here to continue reading “Surprise Mortgage Rate Rise…Relax.” HSH’s free weekly Market Trends Newsletter, an in-depth analysis of various financial markets of the week prior, is published every Monday. Email subscribers receive it in your inbox by Friday night, so sign up today! Also, be sure to check in with our Market Trends blog for all news relating to any weekly shift in mortgage rates.”

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About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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