Are The Best Days Behind for Mortgage Activity?

US Treasury yields have continued to move higher with mortgage rates rising in tow (we explained some key distinguishing characteristics of mortgages versus Treasuries in last night’s Closer).’s national average for a 30-year fixed rate mortgage has now eclipsed 5.25% in the past week which is an over 2 percentage point increase year over year.  Since the start of this series on mortgage rates going back to the late 1990s, that is by far the largest year-over-year increase on record.

Average mortgage rates

Higher rates mean less attractive affordability so purchase applications have continued to fall per the latest Mortgage Bankers Association data.  Seasonally adjusted purchase applications dropped 3% this week and are hovering just above the February lows.

Mortgage Purchase Index

The spring is often the hottest time of the year for housing activity.  As shown below, the few weeks surrounding the current one have often marked the annual high (blue dots in chart below) in non-seasonally adjusted purchase applications over the past decade.  This year that might not be the case.  Activity has been running below that of the prior year and has plateaued more recently as mortgage rates have taken off. At the moment, this year’s high was set a little over a month ago in the second week of March. While a new high for the year is still within tangible reach from current levels—meaning upcoming weeks could still very well experience an uptick to a new high—this year has the potential to see a much earlier than usual high in mortgage purchases.

MBA Mortgage Purchases

Refinance applications meanwhile are far weaker with unrelenting declines recently.  This week marked the sixth week over week decline in a row leaving the MBA’s refinance index at the lowest level since February 2019.  Click here to learn more about Bespoke’s premium stock market research service.

Mortgage Refinance Index

Fixed Income Weekly: 4/6/22

Searching for ways to better understand the fixed income space or looking for actionable ideas in this asset class?  Bespoke’s Fixed Income Weekly provides an update on rates and credit every Wednesday.  We start off with a fresh piece of analysis driven by what’s in the headlines or driving the market in a given week.  We then provide charts of how US Treasury futures and rates are trading, before moving on to a summary of recent fixed income ETF performance, short-term interest rates including money market funds, and a trade idea.  We summarize changes and recent developments for a variety of yield curves (UST, bund, Eurodollar, US breakeven inflation and Bespoke’s Global Yield Curve) before finishing with a review of recent UST yield curve changes, spread changes for major credit products and international bonds, and 1 year return profiles for a cross section of the fixed income world.

In this week’s report we review the possible implications of long-term trend breaks in US Treasury yields.

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