Rates catch a break. Will it last? What’s the impact on housing

By Matthew Graham | Mortgage Daily News

The biggest story for the mortgage and housing market so far in 2021 has been the big spike in mortgage rates. It has been more abrupt and covered more ground than all but the worst historical examples. That said, it was always going to happen when the covid outlook improved.

For something that was “always going to happen,” the rate spike still managed to catch many people off guard. The biggest reason for that was the disconnect between mortgage rates and the bonds that typically dictate mortgage rate movement.

There are actually two types of bonds that affect mortgage rates: Treasuries in a general sense, and mortgage-backed bonds specifically. To make a long story short, the pandemic resulted in an unprecedented breakdown in the normal correlations between bonds and rates.


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