Mortgage rates have drifted higher over the past two weeks. Many loan products are now quoted 10-basis points or more above quotes given in mid-April. Rising rates have crimped purchase-loan activity. Purchase applications were down 2% last week, according to the Mortgage Bankers Association.

Mortgage bond prices and U.S. Treasury prices have drifted lower on a dearth of bad news. In turn, yields have drifted higher. Commodity and oil price are on the rise (as you’ve likely noticed at the pump).  Rising prices is generally viewed as a good sign because demand is picking up and rampant price deflation is unlikely. There’s also little global discord. For the moment, most of us are getting along; markets are settled.

The current ethos is priced into the market. The news is unlikely to get much better, but it could get a little worse.

In fact, we’ve seen bond prices inch up and bond yields inch lower this week. Mortgage quotes have also inched lower. So, what’s going on? Financial markets are slightly unsettled over recent events in the technology sector. The world’s largest company, Apple Inc., missed on quarterly revenue and earnings estimates this week. The news likely had a few institutional investors selling Apple shares and buying low-risk bonds.

Overall, though, there isn’t much bad news, but what bad news there is should hold interest rates at their current levels. The party is still on.

Information provided by Jessica Regan.

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