What Happened to Rates Last Week?
At last Friday’s close, a loss in mortgage-backed securities causes a rise in fixed mortgage rates. Fixed mortgage rates have now reached their highest levels in over 7 years.
On Friday, October 5th, Fannie Mae mortgage-backed securities lost -75 basis points (BPS) which caused fixed mortgage rates to move higher from the prior week. Why? Some say that it’s due to:
- The “hawkish” tone from the Federal Reserve
- Strong economic data
- Strong jobs data
The Chair of the Federal Reserve, Jerome Powell has what some call a “hawkish” tone to his recent speeches. Bloomberg shares an interesting article and video preceeding last friday’s change in the fixed mortgage rates.
VIDEO: Powell Sees Muted Inflation Risk in ‘Extraordinary’ Economy
One recent statement by Jerome Powell from the above video:
“This historically rare pairing of steady, low inflation and very low unemployment is testament to the fact that we remain in extraordinary times. Our ongoing policy of gradual interest rate normalization reflects our efforts to balance the inevitable risks that come with extraordinary times, so as to extend the current expansion, while maintaining maximum employment and low and stable inflation.” – Jerome Powel