Since the beginning of May, the 10-year bond yield has risen from 1.64% to, as of yesterday, May 28, 2.13%.
The sharp change in the 10-year has pushed up fixed 30-year mortgage rates to the highest in the last year.
According to the Mortgage Bankers Association, fixed 30-year mortgage rates jumped 12 basis points to 3.9 for the week ending May 24. It was the biggest jump in rates in 14 months. That also doesn't take into account yesterday's bond sell off which will be reflected in next week's data.
For jumbo mortgages, which are those over $417,500, fixed 30-year rates rose to 4.07 from 3.93, the highest since August of 2012.
Weekly mortgage application activity fell by 8.8% mainly due to a decline in refinancing applications. Refinancings dropped 12%, the largest single weekly drop this year. After all, if you didn't refinance when mortgage rates were at record lows, you wouldn't do so now that rates have spiked.
Is this just a normal correction for bonds coming off extremely low levels?
Is the bond market about to blow up and take cheap mortgages with it?
More From Zacks.com