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The current rise in mortgage rates is unlike anything in history

Mike “Mish” Shedlock's Sitka Pacific Capital Management,Llc

In percentage terms, and that matters to borrowers used to cheap rates, the current rise in mortgage rates is unprecedented.

Mortgage rates from Freddie Mac via St. Louis Fed, chart by Mish

Largest Mortgage Rate Swings in History

In 18 months, the year-over-year percentage change in rates went from -27.8 percent to positive 80.4 percent, a swing of 108.2 percentage points.
The December 2020 decline of 27.8 percent is the largest decline in history.
The June 2022 year-over-year rise of 80.4% is the largest rise in history.

Monthly Average Mortgage Rate Percent

Mortgage rates from Freddie Mac via St. Louis Fed, chart by Mish

Highest Rate in 11 Years

5.37 percent is not a high rate historically, but it is the highest rate since 5.42 percent in June 2009.

Moreover, one cannot get anything close to that rate now. That's a Freddie Mac weekly average rate from early June and it is very stale.

Mortgage News Daily Rates

Chart from Mortgage News Daily annotations by Mish.

As of June 21, the average mortgage rate is 6.07 percent, up from 3.26 percent a year ago.

According to Freddie Mac, the annual average commitment rate across all of 2021 was 2.96%. Rates have now doubled.

New Home Sales Plunge 22.5% In April, 16.6% From Deep Negative Revisions

On May 24, I reported New Home Sales Plunge 22.5% In April, 16.6% From Deep Negative Revisions

New home sales have peaked this cycle and the bottom is nowhere in sight.

Existing Home Sales

Existing home sales courtesy of Trading Economics annotations by Mish

Existing Home Sales Skid Another 3.4 Percent in May

Existing home sales declined for the fourth month in May. Sales are down 16.8 percent since January.

Existing home sales are recorded at closing, new homes at signing. May sales reflect March and April's mortgage rates, not June's.

Expect sales to get worse, much worse.

For discussion, please see Existing Home Sales Skid Another 3.4 Percent in May, Down Fourth Month

Note that the Seventh Largest US Importer Cuts Shipments in Half, Shipping Rates Crash

With mortgage rates up 2.7 percentage points this year and doubling from the average for 2021, this bust is just getting started and with it the demand for goods.

Author

Mike “Mish” Shedlock's

Sitka Pacific Capital Management,Llc

EUR/USD meets initial support around 1.1800

EUR/USD remains on the back foot, although it has managed to reverse the initial strong pullback toward the 1.1800 region and regain some balance, hovering around the 1.1850 zone as the NA session draws to a close on Tuesday. Moving forward, market participants will now shift their attention to the release of the FOMC Minutes and US hard data on Wednesday.

GBP/USD bounces off lows, retargets 1.3550

After bottoming out just below the 1.3500 yardstick, GBP/USD now gathers some fresh bids and advances to the 1.3530-1.3540 band in the latter part of Tuesday’s session. Cable’s recovery comes as the Greenback surrenders part of its advance, although it keeps the bullish bias well in place for the day.

Gold remains offered below $5,000

Gold stays on the defensive on Tuesday, receding to the sub-$5,000 region per troy ounce on the back of the persistent move higher in the Greenback. The precious metal’s decline is also underpinned by the modest uptick in US Treasury yields across the spectrum.

RBNZ set to pause interest-rate easing cycle as new Governor Breman faces firm inflation

The Reserve Bank of New Zealand remains on track to maintain the Official Cash Rate at 2.25% after concluding its first monetary policy meeting of this year on Wednesday.

UK jobs market weakens, bolstering rate cut hopes

In the UK, the latest jobs report made for difficult reading. Nonetheless, this represents yet another reminder for the Bank of England that they need to act swiftly given the collapse in inflation expected over the coming months.

Ripple slides to $1.45 as downside risks surge

Ripple edges lower at the time of writing on Tuesday, from the daily open of $1.48, as headwinds persist across the crypto market. A short-term support is emerging at $1.45, but a buildup of bearish positions could further weaken the derivatives market and prolong the correction.