Mortgage Rates Rise on Election Results, Vaccine News
In a topsy turvy week for markets, mortgage rates ultimately finished the last seven days above where they started, as investors reacted strongly to the initial federal election results and encouraging news regarding a COVID-19 vaccine.
Mortgage rates have barely budged for months, sitting at or near all-time lows even as the economy continued to gradually recover. While economic data have improved, they’ve included very few surprises for investors to react to, meaning most reports have already been priced in by the time the data are released. That changed this week, however. Bond yields fell precipitously in the immediate wake of the federal election, whose results failed to yield a landslide victory for either party – something that investors seemed to be preparing for. Monday’s announcement from pharmaceutical company Pfizer that their coronavirus vaccine has proven to be 90 percent effective in preliminary tests was far less expected, and bond yields jumped on the news. Mortgage rates followed suit, rising firmly in recent days.
The movement was a stark reminder of the influence the coronavirus – and our ability to contain it – has on the direction of financial markets going forward. This budding optimism regarding a treatment for the virus is likely to continue to nudge mortgage rates higher in the near term, barring any setbacks.
