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Mortgage rates rise again despite Treasury long-term debt buyback plan
In the week ended Tuesday, 30-year conforming rates averaged 6.92% and 30-year jumbo rates climbed to 7.14%, with jumbo pricing tied to shifting nonagency risk.
Mortgage rates edged higher in the last week of August even as the U.S. Treasury prepares to start buying back more long-term debt on Sept. 9, according to HousingWire. The lack of a meaningful drop in home loan costs reflected broader market pressure tied to inflation expectations, oil, deficits, and nonagency credit risk, the outlet said.
HousingWire reported that 30-year conforming loan rates averaged 6.92% on Tuesday, up 6 basis points from the prior week. Rates for 30-year FHA-backed loans rose 4 bps to 6.63%, while 30-year jumbo rates increased more sharply, up 34 bps to 7.14%.
On the jumbo spike, HousingWire cited NXT Mortgage Co. director of sales Nash Paradise, who said jumbo pricing tends to move more aggressively amid uncertainty as investors reassess risk in loans not backed by Fannie Mae and Freddie Mac. He also pointed to rising default rates in recent months, and said products outside the GSE framework can react more to delinquency data.
HousingWire added that jumbo loans typically sit on bank balance sheets or are securitized without government guarantees, making them more sensitive to changes in investor appetite and valuations for mortgage servicing rights. Melissa Cohn of William Raveis Mortgage, quoted by HousingWire, said the Treasury buyback plan was expected to bring bond yields and borrowing costs down, but that the initial effect faded quickly as other drivers returned.