Mortgage Rate Volatility: A Wild Week it Was

by Alex Stenback on January 26, 2008

Because a fair number of readers are finding their way here today via the Star-Tribune and a piece penned by Jim Buchta on Mortgage Rates since the Fed cut, we wanted to post a couple of graphics to help everyone understand the wild swings that occured in the mortgage market this week – which was one of the more volatile in recent memory. Here’s what happened:

Immediately after the emergency 75bp cut by the Fed on Tuesday, mortgage bonds began to improve in price.  By the time lenders released pricing on the morning of Wednesday the 23rd, we were seeing rates as low or lower than the all-time modern lows of early 2003 (5.125% or so for a 30 year fixed.)  Which lasted for about two hours. 

Then, as often happens, the stock market began to recover, and mortgage bonds started a two-day selloff.  By the end of the day Thursday, mortgage rates were back above the levels prior to the Fed cut.  Mortgage bonds recovered some ground on Friday, as stocks took another tumble, and by market close, rates were virtually unchanged from where they were prior to the Fed cut.

Still with us?  Here’s a couple of graphics to help (click to biggify):

Buchta_bond_market_prices_2 This chart (courtesy of, annotations ours) represents mortgage bond prices, which move opposite of rates, so the highest point on the chart is the lowest point for rates.

*Bankrate is a notoriously horrible proxy for actual rates (they record paid advertisers rates, which are utter fantasy) but gives a fair measure of directional trends.

If you are looking for up to the minute news on mortgage rates and the factors that drive them, check out the BTM: Quick news/Twitters section on the upper right, or subscribe to BTM Twitters.

Also, one small correction from the Strib – We don’t run CTX Mortgage in Plymouth, this is just where we hang our shingle.

Leave a Comment


Previous post:

Next post: