Article Summary
Mortgage rates moved up to higher levels after the official announcement of a trade deal between the U.S. and the U.K. This increase is unremarkable in the bigger picture and leaves the rate index below the early April highs. The rationale for this market reaction is a no-win situation in the short term, with bonds having specific concerns regarding inflation, foreign demand, and issuance needs.
What This Means for You
- Be aware of the impact of the U.S.-U.K. trade deal on mortgage rates.
- Understand that the increase in mortgage rates is average and leaves the rate index below earlier highs.
- Take note of the complex factors affecting bonds and mortgage rates in the short term.
- Prepare for possible fluctuations in mortgage rates as a result of these factors.
Original Post
Mortgage rates moved back up to the higher levels seen earlier this week after the official announcement of a trade deal between the U.S. and the U.K. Most lenders began the day fairly close to yesterday’s latest levels, but were ultimately forced to raise rates in response to weakness in the bond market.
The rationale for this market reaction can be debated. Some market watchers conclude that a trade deal is simply ‘good for stocks and bad for bonds’ because it’s economically bullish. While that sentiment can account for some of the movement, it’s not the whole story.
Bonds (which dictate rates) have specific concerns regarding inflation, foreign demand, and issuance needs. These are high-level topics that are beyond the scope of a daily mortgage rate recap, but suffice it to say ‘rates have a lot on their minds’ when it comes to how trade policy shakes out. Unfortunately, it’s sort of a no-win situation in the short term. The only exception would have been a full exemption from tariffs.
In the bigger picture, today’s mortgage rate increase is unremarkable–sort of average–and it leaves the rate index well below the early April highs, despite being well above the range seen during the month of March.
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