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Mortgage rates are based on fluctuations in the bond market. Bonds move for many reasons, but one of the most basic is because of their function as a safe haven for risk-averse investors. When investors buy more bonds, rates go down, all other things being equal.
Investors were actually buying more bonds today to move away from the risk that the banking sector could slide back into more turmoil. In fact, the index tracking regional banks fell below levels seen during the most volatile moments of the mini-banking crisis in March.
At times like this the US Treasury gains more from the mortgage market, but mortgage rates still fall. If economic data comes in lower than expected and if inflation comes in lower than expected, there is more room for a decline in mortgage rates in the coming weeks. The average lender is only about half as far back as early April.
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