In case you missed it: The uptick in delinquencies in the FHA sector could be a "canary in the coal mine" for the broader US housing market, according to HousingWire.

Mind the Gap

By now, we all know the deal with mortgage rates — 2022 has seen one of the biggest spikes on record. But there's one detail you may not have picked up on.

If you've been in the real estate industry for very long, you've probably heard that mortgage interest rates track closely to the US 10-year treasury yield. In the second half of 2022, though, mortgage interest rates have become unusually disconnected from that traditional benchmark.

The gap between the two (known in finance jargon as the "spread") is normally anywhere from 1.5 to 2 percentage points, which is where it sat at the beginning of 2022. Today, there's an almost 3% gap between the 10-year treasury yield and mortgage interest rates.

Why the disconnect?

The details are complex, and you can learn more by reading Bankrate's well-researched breakdown of the situation, but it boils down to this: high volatility in rates means that lenders (who normally lock interest rates for anywhere from 30 to 90 days) are looking at a much higher risk of that rate changing dramatically by the time closing rolls around.

All that to say: the sooner mortgage rates stabilize, the sooner the "spread" can come back to earth.

No MBA Release Today

The MBA announced that, due to the holidays, they will not be releasing this week's mortgage application data until January of 2023.

In their most recent release, though, they noted that total mortgage applications (not closings) had increased 0.9% from the week prior.

All Eyes on Rates 

The markets have their first full day since the long holiday weekend, and the average 30-yr mortgage interest rate closed out on Tuesday at 6.5%, according to Mortgage News Daily (Freddie Mac and the MBA haven't yet released their survey this week.)

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