Mortgage rates are likely rising again today as the bond market weakens. When bonds sell off, mortgage-backed securities (the bonds that directly affect mortgage rates) fall too. That usually means lenders raise rates.
So why is this happening?
Oil prices are up, and that often makes investors worry about inflation. When inflation fears rise, interest rates usually rise with them. But here’s the twist: the market’s main measure of long-term inflation expectations hasn’t moved much in the past couple of days. If investors were truly worried about a big jump in inflation, we’d expect to see a stronger move there. We haven’t.
That suggests something else may be pushing rates higher.
Geopolitical tension including the recent U.S. bombing of Iran could be part of it. When military conflicts expand, investors may expect the government to spend more money. More spending can mean more government debt issued to pay for it. When there’s more bond supply, prices can fall and rates can rise.
Mortgage rates are under pressure, but this doesn’t look like a major inflation breakout. It appears to be more about market volatility, oil prices, and possible increases in government borrowing.
I'm hoping that this settles down in the next few days
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