Article courtesy of CNBC via “The Rundown”
A sharp sell-off in the bond market is sending mortgage rates to the highest level in seven years.
The average contract rate on the 30-year fixed will likely end the day as high as 4.875 percent for the highest creditworthy borrowers and 5 percent for the average borrower, according to Mortgage News Daily.
Mortgage rates, which loosely follow the yield on the 10-year Treasury, started the year right around 4 percent but began rising almost immediately. They then leveled off in March and early April, only to begin rising yet again. Tuesday’s move follows positive economic data in retail sales, suggesting that newly imposed tariffs would not hit sales as hard as expected.
Rates have been widely expected to rise, as the Federal Reserve increases its lending rate and pulls back its investments in mortgage-backed bonds. But mortgage rates have reacted only in fits and starts.
“The bottom line is that the writing on the wall has been telling rates to go higher since at least last September,” said Matthew Graham, chief operating officer of Mortgage News Daily. “Rates keep looking back to see if the writing has changed, and although there have been opportunities for hope (trade wars, stock selling-sprees, spotty data at times), it hasn’t. Today is just the latest reiteration of that writing.”