As recently as late July, it wasn't outside the realm of possibility to see certain lenders quoting conventional 30yr fixed mortgage rates in the high 4% range in some cases. Granted, those quotes typically included some additional upfront cost to get the rate lower, but the same is true of the most widely cited weekly mortgage rate survey from Freddie Mac.
Freddie's survey came out this morning showing a modest 0.11% increase from last week to 5.66% with 0.8 points upfront. That would equate to roughly 5.9% without any points based on the average lender's buydown costs. Unfortunately, this is still way too low to capture today's reality, which was 6.23% this morning.
To be clear, the 6.23% is the reality. It is derived from actual daily rate sheets as opposed to Freddie's survey responses, most of which were received on Monday. A lot has changed since Monday! Most of the change happened in the past 24 hours. During that time, bonds (which dictate rates) have sold off aggressively, partly due to compulsory trading associated with month-end and partly due to economic data that refuses to show any tightening impact from Fed policy changes.
Specifically, all of this morning's labor market data came in as strong or stronger than expected. The Federal Reserve has repeatedly said it would like to see its policies having a negative impact on the jobs market before considering progress in the fight against inflation. Bonds sold off quickly after the data. Excess selling in the bond market results in rates moving higher, all other things being equal.
Even though some of the bond market weakness is due to speculation that tomorrow's official government jobs report sings a similar tune, mortgage lenders are forced to set rates based on where bonds are trading today. That happens to leave the average lender well over 6%. Tomorrow's jobs report brings potential volatility for better or worse. It could easily push rates even higher if the labor market remained hot, or it could help rates fall a bit if job creation declined appreciably versus the previous report in early August.