Mortgage Rates Index - JUN 4
BIGGEST daily rate improvement in over a month 🏡💲↘️
Today was the BIGGEST daily improvement for mortgage rates in over a month.
This brings the 10-day decline in the cost of getting a mortgage to over 100 bps, or $1,062 per $100k of loan.
That is a $5,310 cost savings in just 10-days for a $500k loan.
The LendZen Index tracks the change in mortgage rate prices across a spectrum of MBS.
That is because in the USA mortgage rates do not rise or fall. Instead, the cost of each rate changes based on the daily fluctuation in the price of mortgage bonds (MBS).
As bond prices increase, the cost of mortgage rates becomes less expensive.
This index also helps to illustrate the point I make regularly:
“It is not that lower rates are suddenly unavailable, it’s that the cost to get a loan at those lower rates is no longer economically feasible for borrowers to pay. As a result, lenders refrain from promoting them.”
Mortgage bonds provide a similar investment as government bonds.
This is why the RATE of the 10-year Treasury Bond shows an almost perfectly inverse relationship to the PRICE of mortgage-backed securities.
Bonds rallied today (less expensive mortgage rates) after the ISM Services report came in under 50 for the first time in nearly a year and much weaker than expected ADP Payrolls data.
Only 37K new private sector jobs were added in April, the lowest in over 2 years, and well below the expectations of 115k.
Despite its inconsistencies with the Non-Farm Payroll report, this ADP data increases the potential Friday's NFP will also disappoint - this would add further fuel to the ongoing bond market rally of the last 5-10 days.
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