30-year mortgage rates are doing something very bad, very quickly

[solarbird]

30-year mortgage rates are spiking overnight and today - ERate has shows yesterday at 5.08%, today at 6.52%, or almost +150 basis points; realtor.com this morning was showing 6.32%, a huge spike upwards; Chase is showing 6.625%, 15-year of 6.875%. I noticed this morning that mortgage calculators were suddenly coming up with very strange numbers, and I'd thought it was a glitch; apparently, it wasn't. Also - hat tip: various people on TickerForum - check out this price action on 30-year Fannie Mae mortgage-backed securities:
Data courtesy http://www.mbsquoteline.com
Invert that and you get an idea of interest rates being paid on those securities, spiking upwards. Hence, the spike in mortgage rates. This is another stomach punch to the housing market.

eta: The TNX (10-year Treasury index) is also doing some very bad things, jumping from 3.5 to 3.7 in a couple of hours, which is not quite as dramatically quick a move, but still a large move in a short period of time. This is again in a down stock market, which is not good.

eta2: Karl at Market Ticker has more charts, and some things to say about this, including an interesting one regarding quantitative easing.

eta3: The TYX (30-year Treasury index) is in on the game, too, up to 4.606%.

Comments

[emmacrew.livejournal.com]

Bad news for the people a few doors down from us who just put their house on the market a couple of days ago (for $1.15 million? I don't THINK so...)

[solarbird]

Bad news in general. Particularly California - more than half of sales are foreclosure-sales to first-time buyers, who are the most rate-sensitive.

[emmacrew.livejournal.com]

Oh, absolutely. I just thought of the neighbors because of the brand! new! sign out front. MLS 29074333 -- it's a nice house, but the one right next door to it sold for ~900K at the top of a bubble a couple of years back, so I'm unsure where the price came from. They did just have renovators in this month so maybe they think a fancy new kitchen will make the difference.

[maellenkleth]

They must be kidding? Who on earth has a spare 1.15 E+06 dollars lying around these days? (Let alone financing that whack of money?)

[emmacrew.livejournal.com]

My guess is it's a fishing expedition and that they will be happy with less; they've been here longer than we have (might be the original owners) and probably didn't pay more than a third of that when they started out in the house.

[firni.livejournal.com]

Hm, maybe people will stop telling me to refinance now. It never got down low enough to make up for the point we'd have to pay to get the new rate.

[emmacrew.livejournal.com]

My mom's been thinking of refinancing over the last month or so, her window of opportunity has probably closed.

[firni.livejournal.com]

I had friends shrieking "REFI! REFI!" over the last, oh, six months. The rate never dropped low enough for it to be worth our while. We got a pretty good rate with our refi four years ago.

I know I'm filled with teh stupid, but I can't figure out why the rates are going up when prime is so low. Or did they raise prime when I wasn't looking?

[solarbird]

Yeah, me too. I kept running the numbers and going, "well, sure would be great if this didn't RESET THE CALENDAR or nothin'" but it did, and if you dropped to shorter mortgage lengths, it didn't buy us anything, so, yeah. Foo.

[sistawendy.livejournal.com]

Boy, am I glad I closed on my refi last week.

[maellenkleth]

Okay, you hereby are granted 200 Prescient Nun points, to clip and save. ^_^

[mhaolain.livejournal.com]

Wow, serious bad news. Are we ready to cue up keyboard cat yet, or is this just the raising of the paws?

[solarbird]

Well, it means the bottom ain't in for housing, like a lot of people keep saying it is. Or will be. Any second.

[maellenkleth]

ugh. thanks for the heads-up. Really glad that we have either locked low long-term rates, or altogether paid-off, on the various houses en famille.

[sunset-serenade.livejournal.com]

Do realize that this is merely an Index, not the actual 10 yr rate (see rates: www.bankrate.com). These actual rates aren't moving much, if at all from week-to-week.

As for the Treasuries true they took a fall, but not due to China's interest (or lack thereof) in them, but more likely from the new-ish threat from N Korea.

Lastly, Moody's has reaffirmed AAA rating for U.S. Treasuries. We're doing more than fine, for now.

[solarbird]

I am aware this is an index (and as such, not the actual 10-year rate at government auction). However, it does reflect goings-on in the secondary market, and usually moves contrary to stocks. Moving with the equities markets implies people taking money out of all markets and moving to cash. Similarly, the timing was interesting, corresponding reasonably well to the MBS spike.

The ratings agencies kept AAA-ratings on all kinds of crap that ended up worth 30¢/dollar - ABX and CMBX, I'm looking at you - until long after the insanity of a AAA-rating on those instruments was apparent to everyone. I am not calling a T-bill crisis here - but the MBS moves today are substantial and are meaningful unless reversed more or less immediately.

I am, however, worried quite a bit about a potential T-bill crisis. Treasuries don't historically take falls in response to things like the DPRK's every-five-to-six-years sabre-rattling; they normally jump, as part of a flight-to-safety reaction. That the converse happened - particularly during a sharply down stock market - is highly atypical.

[flit.livejournal.com]

I guess I should have gotten off my duff and investigated whether a refi would be smart uhhh a month or two ago.

[flashfire.livejournal.com]

Whether this is a blip or not (I don't really think rates would suddenly shift from about 4.82% or whatever they've been at to over 6% just like that), I'm glad I got locked in at 4.5%.

[solarbird]

They absolutely did do that today. Those are live, actual, mortgage quotes I was presenting above.

The question for tomorrow is whether the MBS market continues to exhibit today's behaviour. The MBS prices did not recover today. What happens tomorrow will be interesting.

[flashfire.livejournal.com]

They do fluctuate day to day, but I think the key will be seeing what the results end up being tomorrow when figures are taken for Friday's news.

I did see this: http://online.wsj.com/article/SB124346921018160569.html

It quotes: "The average 30-year mortgage rate jumped Wednesday to 5.29% from 5.03% the previous day, according to HSH Associates, a mortgage-data publishing firm. That's the most dramatic swing since March 19, after the Fed announced its plans to buy more mortgage-backed securities and U.S. Treasury bonds."

[solarbird]

Yeah, not everybody updates their published rates mid-day. Those banks that reacted immediately to the MBS market spike jumped as shown. Those that keep loans in-house will react more slowly - if they can undercut, they will, because that's competition.

[solarbird]

The word I'm seeing btw is that you'll probably see an average book of +50bp tomorrow, and another +50 the day after that, if this doesn't reverse itself. I'm also hearing a lot of expectations that there will be some sort of Fed action to knock this back down before it gets any further. I don't know what will happen here, but this is a huge shift.