Mortgage rates improved modestly today as investors remain cautious amidst rising coronavirus stats in several states.  The experience of those states is fueling broader concern about a 2nd wave of the disease that may logically follow less efficient social distancing as various states and counties reopen for business.

In general, when investors are feeling cautious or fearful (relatively), we tend to see things like the bond market do better while stocks do worse.  That's not a hard and fast rule, but it' a fair generalization.  This notion is supported in the current environment by the fact that stock prices and bond yields have been an almost perfect mirror image of each other recently.  

Bond prices move inversely with rates/yields.  In other words, higher bond prices lead to lower interest rates.  Mortgages are part of the bond market because a majority of them end up being grouped together and effectively "turned into" bonds via the securitization process.  As bonds, they offer an alternative to things like US Treasuries for some investors.  Simply put, strong demand in the bond market tends to find its way into mortgage bonds as well, thereby pushing bond prices higher and mortgage rates lower.

Again, today's movement was fairly modest, but nonetheless friendly.  The average lender is within an eighth of a percentage point from the rates offered during last week's all-time lows.


Loan Originator Perspective

Bond markets posted small gains Thursday, as unemployment claims continued above expectations.  My pricing was minimally better than Wednesday's.  While I'm not in a huge hurry to lock, most clients are locking when we meet their target pricing is available, especially risk averse folks.   -Ted Rood, Senior Originator, Bayshore Mortgage

We continue to see further consolidation at the current levels for interest rates.  There’s a lot of mixed data out there than can make case for rates to move higher or lower, but at current levels speculating doesn’t make much sense. We have been actively locking loans as we are near historic lows.  -Gus Floropoulos