Good Thursday morning from your Hometown lender! Let’s dive into today’s market analysis.
Yesterday saw rate sheets creep higher. The advice was to lock though, for protection, because oil was likely to be pushed higher with the Houthis striking Saudi oil tankers in the Red Sea.
Rate sheets today are going to see a much bigger jump than the last couple of days, with bonds taking big losses early and the 10yr Treasury yield pushing to the highest level of the year. Brent crude oil jumped to just under $100 a barrel and is sure to break it soon as the Houthis have effectively shut down the Bab al-Mandeb strait in the Red Sea, another important route for oil. If oil continues to move higher today, and traders start to really panic, we can expect a selloff in bonds that would put lenders in a position to reprice worse.
Market Analysis – From a higher and better view:
Market Analysis –Quick Snapshot
- Bonds: The 10-year Treasury is trading around 4.68%–4.71%, its highest level in well over a year, as soaring oil prices and escalating Middle East tensions reignite inflation concerns. Bond investors are learning an old lesson: when oil spikes, mortgage rates usually don’t send thank-you cards.
- Mortgage Rates: The average 30-year fixed mortgage is approximately 6.65%, while the 15-year fixed is around 6.00%. Mortgage rates remain under upward pressure as Treasury yields continue climbing.
- Fed Watch: Markets are increasingly focused on next week’s Federal Reserve meeting. While most investors still expect the Fed to leave rates unchanged, futures markets are assigning higher odds to another rate hike later this year as energy prices threaten to keep inflation elevated.
- Labor Market: Weekly jobless claims remain exceptionally low, reinforcing the view that the labor market is still strong. A resilient economy gives the Fed less urgency to ease monetary policy.
- Oil & Geopolitics: Brent crude has surged into the upper-$90s per barrel after renewed attacks near key Middle East shipping routes raised fears of supply disruptions. Rising energy prices are once again becoming the market’s biggest inflation concern.
- Markets: Investors continue digesting major technology earnings while balancing concerns over inflation, interest rates, and geopolitical risk. Strong corporate results are helping sentiment, but rising yields remain a headwind for stocks.
Market Analysis –What It Means
Today’s market isn’t being driven by economic reports—it’s being driven by energy prices and geopolitics.
In plain English: Higher oil prices make it harder for inflation to keep cooling, which makes it harder for mortgage rates to move lower.
Market Analysis –Housing & Mortgage Strategy
This remains a structure-the-payment market.
Today’s best conversations are about:
- Seller credits
- Temporary and permanent buydowns
- Builder incentives
- ARM options (when appropriate)
- Creating a refinance strategy for the future
The buyers winning today aren’t waiting for perfect rates—they’re making smart financing decisions.
Lock vs. Float
- Lock bias: If closing within the next 30 days, locking remains the prudent strategy given rising Treasury yields and geopolitical uncertainty.
- Float bias: Borrowers with longer closing timelines may choose to float, but should be prepared for continued volatility as markets react to oil prices and next week’s Fed meeting.
Today’s guidance:
Bias toward locking until inflation pressures from energy markets begin to ease.
Stay safe and make today great!