Mortgage rates had enjoyed a solid little run for almost all of April and again in the first week of May. By last Thursday, they were at their lowest levels in more than 2 months in many cases. Even now, they're still closer to those recent lows than to the highs seen at the end of March, but they're definitely higher.
Rates are primarily driven by trading levels in the bond market. Those trading levels take a variety of cues, but one of the most basic is that of "supply and demand." Econ 101 teaches us that higher supply begets lower prices, all other things being equal. The same is true for bonds. This week, supply is surging on several fronts with record sizes for Treasury auctions and several large corporate bond offerings. While neither of these are the same bonds that most directly influence mortgage rates, they are correlated and interdependent enough that mortgage rates ultimately feel the ill effects of increased supply.
In the worst cases, borrowers may see rates that are as much as an eighth of a point higher than they were at times last week (conventional conforming 30yr fixed). Despite the increase most lenders remain in the low 3% to high 2% range for flawless scenarios.