Mortgage Rates Quickly Approaching 6%

Right off the bat, it’s worth mentioning that many mortgage quotes are already over 6% for a variety of reasons.  But when it comes to the “going rate” quoted in the news or on mortgage/housing sites, we’re typically dealing with some form of “best case scenario.” 

Those rates were in the low 5’s at the beginning of the month, but have moved up quickly since then–especially since last week.  It would only take another day or two at the current pace for the average lender to be over 6% for the first time since mid-June and only the 2nd time in 14 years.

Today’s deterioration is better thought of as just another day in a general trend of deterioration ahead of several key events.  Some of these won’t happen until next week, but the biggest wild card is coming up on Friday.  That’s when Fed Chair Powell delivers a speech at the Fed’s Jackson Hole Symposium.

Jackson Hole is an event that can be a total dud in terms of inspiring market volatility, but that can also serve as a venue for the Fed Chair to prep the market for a policy shift at the upcoming September meeting.  In the current case, there’s a lot at stake for that meeting.  Granted, we seem to have a fairly good idea of how the Fed will approach it, and to be sure, much depends on the economic data that comes out between now and then, but there’s always a chance the Fed Chair will say something that helps the market refine it’s understanding of the Fed’s current stance. 

All that to say that much of the recent upward pressure in rates is attributable to the market getting in a position to digest any bombshells on Friday, or lack thereof.  On a positive note, when markets undergo this kind of positioning only for the Fed to be friendlier than expected, rates often breathe a sigh of relief.