What just happened to mortgage rates?

Yesterday the Federal Reserve raised short term interest rates by a whole 50 bps — the largest single increase since 2000.

Good afternoon! Was this newsletter forwarded to you? Sign up here. Hello, LOs!   Yesterday the Federal Reserve raised short term interest rates by a whole 50 bps — the largest single increase since 2000. We asked industry experts, including our own lead analyst Logan Mohtashami, what this means for mortgage rates, since things have changed even in the last 12 hours.   Here's the short version: Because the Fed has been clear it planned on raising rates six times this year, many experts think this increase has already been baked into current mortgage rates. Mike Fratantoni, chief economist at the MBA, said yesterday: "This change had been telegraphed clearly in recent speeches." But, the relatively positive response from the markets yesterday has changed significantly. After a night to think about the implications of the rate increase — and Powell's comments that more rate increases of this size are likely — the stock market fell sharply Thursday.

Bonds, not stocks, are usually the key to mortgage rates, Logan notes. Bond yields reversed on Thursday, rising very sharply, which means mortgage rate pricing just got a lot worse. "It's been a very aggressive two-day volatility in the stock market and bond market," Mohtashami said. "If bond yields keep rising; we have more room to get to mortgage rates of 5.875% to 6.25%. However, if economic data fades and yields come down, mortgage rates will go down with them."

 

Read more here and don't miss our housing market update event next week — we've got Logan plus Odeta Kushi, deputy chief economist at First American, Mike Simonsen, cofounder of Altos Research, and Matt Graham, founder and CEO of MBSLive.net to break it all down.

 

Keep calm and carry on —

 

Sarah Wheeler, Editor in Chief of HW Media

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