Mortgage Rates Headed Higher

Here we are on what would normally be a light day of financial news but after the release of the strong than expected June Jobs Report mortgage bonds are getting creamed!

As I type I see the Fannie Mae 3.5% coupon trading down 194 basis points in price.  Ugh.  Just looking at this chart (see below) makes me want to close my laptop.

When will this carnage end?  Hard to say as we continue to blow through expected levels of price support.

The continued downslide in price (move higher in rates) continues to cement in what I thought weeks ago.  What was that?

That the end of the secular (11 year run) for lower and lower mortgage rates is now done.  Finished.

So, while it might take a little while to accept this reality accept it we must.

Don't let hope for a return to lower rates misguide your thinking.  The odds are severely stacked against it.

I'll continue to watch the trading and inform you here as we will eventually find price support somewhere.

Until then, enjoy the holiday weekend and the growing strength in the housing market that we are seeing in the data.

Brett
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