With inflation likely causing the Fed to keep hiking rates aggressively (more on that in the Capital Markets section at the bottom), many people in our industry are asking how high mortgage rates can go. The talk in the bond markets today is perhaps a 100-basis point increase in the fed funds rate next week and the funds rate getting to above 4.25 percent by the first quarter of next year as a current rate around 2.5 percent and inflation around 8 percent still puts the Fed way behind the eight ball. The 10-year Treasury yield is 3.45 percent this morning and 30-year fixed mortgage rate is about 6.25 percent, making for a spread of about 280-basis points. If the 10-year Treasury gets to 4.25 percent, for example, would that put the 30-year fixed at 7 percent? Rates going higher from here doesn’t make much of a difference with mortgage refinance originations as the miniscule figures we are seeing now will remain miniscule with higher rates, but higher rates will have an impact of housing sales. With the prospect of recession on the horizon, some potential buyers have one question on their minds: Do we really want to buy a home now? Purchase business could fall further and as a reminder, those impacted by mortgage companies downsizing can post their resume for free here and employers can view them for the nominal fee of $75. Even Wells Fargo, once the 600-pound gorilla of residential finance, is no longer actively working to be the nation’s largest home lender, instead shifting its focus to its consumer and wealth clients at the expense of its servicing business. (Available here, this week’s podcast is sponsored by SimpleNexus an nCino company and award-winning developer of mobile-first technology for the modern mortgage lender. Todays has an interview with Lori Brewer and Shane Westra on ways for lenders to improve ROI and efficiency in the current market.)

Published On: September 14, 2022 / Categories: Mortgage News /