Rates Surprisingly Steady Despite Turmoil in Equity Markets
Mortgage rates held steady this week — perhaps surprisingly so – after failing to succumb to the storm created by volatile equity markets. Stocks tumbled in recent days amid concerns over U.S./China trade relations and the U.S. economy’s ability to maintain strong growth through proposed interest rate increases.
Normally, such instability presses mortgage rates lower, as investors seek safe haven in the form of Treasuries, which typically move in tandem with mortgage rates. However, the reaction was mostly muted this week, even compared to changes in Treasury rates, suggesting that a return to rising rates could very well be on the horizon. Continued uncertainty on Wall Street may prompt a significant retreat, but for now rates are holding firm very near to their highest levels in seven years.
Disappointing housing data headlined what was a slow week in economic data releases, with rates reacting only slightly, as a result. However, things pick up on Friday with the release of Q3 advanced GDP data. A strong release could be another signal for mortgage rates to return to their upward trajectory.
