After moving higher for 5 days in a row, mortgage ratesÃ‚Â finally moved a bit lowerÃ‚Â today. Ã‚Â The improvement was fairly small, however, merely undoing Friday's modest move higher. Ã‚Â
Bonds markets (which dictate rates) continue to price in extremely high chances of a Fed rate hike next week. Ã‚Â That wasn't entirely the case before the recent 5-day losing streak. Ã‚Â In fact, the odds of a Fed rate hike more than doubled last week based on market metrics. Ã‚Â
This doesn't mean the Fed was half as likely to hike 2 weeks ago. Ã‚Â Rather, it has more to do with the fact that financial markets had been sort of complacent about adjusting bond prices to reflect the probability. Ã‚Â Complacency ended early last week and bond yields (and thus "rates") quickly adjusted to their new, higher reality).