Rates have been trending higher in fits and starts since August 2020, but the mortgage market was insulated from much of the pain due to its disconnect from Treasuries in 2020 (they typically correlate very well). 2021 saw the correlation return despite a few divergences due to things like mortgage-specific fee changes. By the end of 2021, both Treasury yields and mortgage rates were moving higher with a purpose.
Enter 2022, and with it, a fairly big shift in tone from the Federal Reserve regarding the pace at which it will be removing accommodation (fancy words for "doing things that aren't helpful for interest rates"). That made January one of the worst months for mortgage rates of the past decade, but more of the damage was seen at the beginning of the month.
Over the past few weeks, we could make a decent enough case that rate momentum had leveled off and was drifting sideways. That's not an uncommon development after a big spike. The market might do this to catch its breath before the next move higher, or to signify a supportive ceiling before a moderately friendly correction. Such things aren't decided ahead of time. They happen in response to ongoing input from data and events that matter to rates.
The big monthly jobs report is something that typically matters a great deal to rates. Oddly enough, today's jobs report was NOT seen having much of an impact for a few reasons. First off, analysts expected a much weaker number due to Omicron's likely impact. Moreover, the Fed is almost exclusively focused on inflation right now as opposed to the labor market (employment and prices are the 2 key parts of the Fed's job description). In short, no matter what today's jobs numbers turned out to be, they weren't likely to impact the market's view of the Fed's reaction.
All of that is now out the window, sort of. Although there are several important caveats regarding major seasonal adjustments, the jobs numbers were so much higher than the average forecast that markets were forced to respond. Fed rate hike expectations increased briskly and bond yields surged to their highest levels in more than 2 years.
If we disregard the once-in-a-lifetime volatility seen in March 2020 (and we absolutely should), today's mortgage rates are now in line with the highs seen in October 2019. The average lender is now quoting conventional 30yr fixed rates in the 3.75-3.875% neighborhood. That's a full eighth of a point higher than yesterday, and more than a full percentage point higher than the lowest rates in August 2021. Many less than perfect loan scenarios will see rates over 4%.
NOTE: mainstream rate tracking surveys have NOT yet caught up with this move. Freddie Mac's weekly survey, for instance, was published yesterday and is based largely on the rates that were available this past Monday. Quite a bit has changed since then...