Rates went higher. Much higher! October 3rd was the greatest single date rate increase since the 2016 presidential election. Rates are about 1/8th of a percent higher than a week ago. Why the sudden increase? Well, economic news keeps coming in better than expected. Last month, we saw hourly earnings increase above projections, which started a sell off in mortgage bonds. Then yesterday the ADP National Employment Report was well better than expected. Adding more jobs AND an increase in hourly earnings is a double whammy for bonds and mortgage rates.
In addition to employment news, the Dow hit another record high yesterday. In short, the US economy is booming, the market is in a “risk-on” position, and bonds across the board are taking the hit. This certainly would indicate that there will be more rate hikes to come and barring any surprising economic indicator downturns or more “trade-wars”, mortgage rates will be on the rise as well.
Watching the technical, the outcome remains the same. Bond yields have broken above recent highs and trending upward. Unfortunately, the trend is NOT our friend as this may indicate that the lowest rates of this economic cycle may already be behind us and we can expect to see rates continue to rise.
Now is good time to differentiate yourself from the rest! Reach out to your existing clients with their best interest in mind and talk to them about the net benefit/ harm of consolidating their debt with a refinance. Make sure you are working with a mortgage professional who is able to determine the best fit for your clients and not just a salesperson.
As always, If you have any specific questions or scenarios you would like to discuss, I am always happy to help!