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US Mortgage Rates Inflect, Rocket Higher
Damn you jobs!
Mortgage rates in the US jumped sharply over the last week and you can thank America's stubbornly resilient labor market.
To briefly recapitulate, financing costs for grossly overpriced American homes fell for eight straight weeks from early August through late September. Indeed, the 30-year fixed on the MBA's index only posted one WoW gain from July 3 to September 25, a stretch which, not coincidentally, encompassed a five-month US Treasury rally.
Most would-be homeowners and,
Mortgage rates will probably go lower even of 7-10 year us treasury bonds stay flat. The basis between ust and mortgages are too wide. When short rates normalize banks will probably look at conforming residential insured mortgages will be an attractive investment versus intermediate us treasury bonds. In addition arm rates may become more attractive for borrowers
I agree, 240bp spread is historically high. QT for MBS may keep spread above lower end of historic range, but if rate uncertainty settles down and yield curve pushes banks toward mortgages, spread could go to midrange 150bp-ish which implies 5.5% mortgage rate.
Anyway, this is one reason why “no cut” in Nov may effectively result in tightening, which perversely could be seen by some as housing-inflationary.
Meanwhile in FL, GA, and SC several million people suddenly need a building loan