As we approach a crucial week for mortgage rates, the 10-year yield and labor data could influence the Fed's decisions. If we witness more softness in the labor market, the 10-year yield and the labor data will eventually force the Fed's hand.
If the spreads return to normal, we could see a 0.75% to 1% improvement in mortgage rates just from that without the 10-year yield moving lower.
The seasonality of purchase application data ended last week, as volume typically starts to fall after May. However, the mortgage purchase application data is so low historically on the volume side that the seasonal drop can be limited.
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