According to & article today on mortgage news daily:

Mortgage rates were abruptly higher today, moving back toward the highs of the month and erasing most of the improvements seen since the Employment Report on August 2nd.  After an excessively calm week last week, market participants had eagerly anticipated today’s Retail Sales report as the first major dose of information since that Employment Report.  Rates were already on the move higher ahead of the data owing to bond market weakness in overnight.  While the headline numbers on the Retail Sales report weren’t as high as expected, not only was the previous reading revised higher, but the other components of the report–such as those that strip out the more volatile auto sales–were stronger than expected.  By the end of the day, the most prevalent 30yr Fixed quote (best-execution) is edging up from 4.5 to 4.625% for some lenders.

In order to understand why rates moved as much as they did today, we first need to frame Retail Sales in the context of the prospects for a reduction in the Fed’s asset purchases–aka “tapering.”  Markets and even the Fed itself are undecided as to whether tapering will start in September or later in the year.  Because the asset purchases are seen as a mathematically quantifiable reason for lower rates, the sooner the reduction in purchases occurs, the higher rates will go, all other things being equal.  This morning’s Retail Sales numbers stood as the first major piece of data to inform that debate since the Employment Report at the beginning of the month.

Quite simply, the data “wasn’t bad enough” to push out the expectations for a tapering time frame.  Combining this with the upward momentum in rates coming out of the European market hours and it was enough for a significant move higher.  Unfortunately, it wouldn’t be until Thursday that we even have a chance to get data that counteracts this “vote.”  Even then, this would require several different pieces of data having the same economically bearish suggestion.  In other words, rates aren’t likely to stampede back toward better levels unless that happens.  If the data happens to confirm today’s message from Retail Sales, rates could go even higher.

Today’s Best-Execution Rates based on the larges 40 lenders in the US!

• 30YR FIXED – 4.5% “ZFG Mortgage 4.375%”
  
• FHA/VA – 4.25% “ZFG Mortgage 4.125%”
• 15 YEAR FIXED –  3.625%-3.75% “ZFG Mortgage 3.375%”

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