A Shift in the Landscape of Rates

Mortgage Rate Outlook: A Shift in the Landscape

In this October 2024 update, I want to shed light on a critical development in the financial markets: the end of a nearly 40-year downtrend in interest rates. This change, which began in 2022, signals a significant shift from what many of us in the mortgage industry had grown accustomed to—a consistently declining rate environment.

For decades, the 10-year Treasury, a key benchmark for mortgage rates, moved predictably within a downward channel. However, that pattern was disrupted in 2022, giving way to a new uptrend. While some professionals remain hopeful that rates will revert, the data I’ve been tracking suggests a new normal might be emerging.

My recent chart analyses indicate that the uptrend also experienced a breakdown around mid-2023, introducing uncertainty and volatility. I’ve identified crucial levels to monitor: 3.661% as support and 3.847% as resistance. Movements outside this range could drive significant rate changes.

Beyond the technical side, broader economic concerns loom large. Inflationary pressures, fueled by premature rate cuts, government spending, and supply chain disruptions from strikes and hurricane-related damages, are putting upward pressure on interest rates. Notably, prominent investors like Stanley Druckenmiller are reportedly betting on rising rates.

Given this context, I advise fellow mortgage professionals to exercise caution when floating rates and managing client expectations. In volatile times like these, accuracy and prudence are more important than ever.

Key Takeaway: The mortgage rate environment is no longer predictable. We must adapt to a new framework driven by economic complexity and market volatility.