Mortgage rates began the new week on a bad note with the average lender full erasing the improvement seen on Friday. This leaves many lenders at their highest levels since April, but in those cases, it should be noted that today's rates are extremely close to those seen in late October. In other words, we're essentially back in line with the highest levels in more than 7 months.
In outright terms, the average lender was closer to 3.125% on a top tier conventional 30yr fixed scenario. Today, they'd be closer to 3.25%.
The rate spike was driven by bond market weakness. This will almost always be the case for any rate spike as rates are primarily determined by the bond market. Bonds were reacting to a combination of challenges. The first was the re-nomination of Jerome Powell as the Chair of the Federal Reserve. While this was widely expected, the market was entertaining some chance of Fed governor Lael Brainard taking his place. Brainard is viewed as more rate-friendly. As such, the Powell nomination was a negative development this morning.
Bonds faced additional pressure from today's Treasury auctions. These auctions frequently have no impact on rate momentum, but if they end up being much weaker than recent averages suggest, it can put immediate upward pressure on rates. Long story short: that was the case today.