Mortgage rates jumped higher at the fastest pace in weeks on Friday, sending the average mortgage lender back to 6.50% for top-tier 30-year fixed scenarios. That was up from 6.38% on Thursday and marked the highest levels since March 30.
The move came after overnight news raised the possibility of a prolonged blockade of the Strait of Hormuz, a prospect markets took seriously because of conversations with oil executives about the impact on domestic energy markets and fuel prices. Bond yields and oil prices moved higher again after a White House official reiterated the overnight report, and most lenders made mid-day adjustments to even higher rates as the underlying bond market kept weakening into the afternoon.
The day’s surge was already largely in place before the Federal Reserve’s latest statement came out. More than 80% of the rate spike had happened ahead of the announcement, even as three Fed voters objected to the wording and preferred language saying rates could go either way depending on inflation and the economy.
That left the Fed as a contributor, but not the trigger. The market had already latched onto the energy shock risk, and the bond market’s reaction was doing the heavy lifting for mortgage pricing. Because bond yields and mortgage rates tend to move together, the jump in yields translated quickly into higher borrowing costs for homebuyers.
For borrowers, the sharp move means the reprieve from early June did not last long. The question now is whether the Strait of Hormuz concerns deepen further and keep pressure on oil, or whether the bond market stabilizes enough to pull mortgage rates back below Friday’s level.