Between Friday and Today mortgage rates have jumped a solid 1.0%. From about 5.0% to 6.0% in two days. Have mortgage rates done this before. Yes, they have. In March 2020 in response to the lock down of the COVID-19 pandemic we saw similar volatility. But these types of wild swings higher or lower are very rare.
Why are rates going bonkers? The one word answer is inflation. Friday a report was released stating the inflation problem in the United States and the world is worse than expected. The bond market hates inflation. And mortgage rates follow the bond market. The easy equation is higher inflation = higher mortgage rates.
The Federal Reserve and their monetary policy is the only answer we have to combat inflation. The Fed speaks on Wednesday, and right now we don’t know what they will do. When there is uncertainty in the air, any bad news is compounded by that uncertainty. These two ingredients are the recipe for the higher mortgage rates today.