Mortgage rates hit 6 month highs by the end of last week, but they've been cautiously recovering since then. The rebound traces a similar pattern in the bond market, as is typically the case considering lenders rely on bonds as the primary ingredient in the interest rate recipe.
In simpler, more normal times, bonds would be primarily concerned with economic reports, inflation, and government debt issuance. All of those things still matter, but because of covid, the market is picky about which economic reports it views as important. More importantly, the Federal Reserve's bond buying program is an even bigger consideration at the moment. It is universally assumed that the Fed will begin reducing its bond purchases soon and that they will announce that intention next Wednesday.
Even though everyone knows it's coming, these big-picture shifts in policy are nonetheless a big deal for the bond market. In the past, they've paradoxically been good for rates, but it remains to be seen if the same correlation will hold up given all of the unique interdependencies associated with the post-covid economy.
For now, all we can observe is that the average mortgage lender is priced just slightly better than they were yesterday, but still higher than they were a few weeks ago, and significantly higher compared to a month or two ago.