Last week we wrote that, if lenders kept repricing on the pattern of September, another round was more likely than a pause. This week brought the pause. Nothing on the shelf moved.
The broker-panel lists we follow have not refreshed since the update we described last week, and every product on them is where it was, at the same rate and fee. The direct lender we follow most closely has still not issued a new guide since its whole-range reprice in mid-September. After a month in which pricing changed almost weekly, a week without any change stands out.
Swaps eased. The five-year is now around 4.7%, roughly six basis points lower than last week’s record reading. The two-year is a little over 4.5%, about nine basis points lower, and the three-year fell furthest, by around eleven. The ten-year went the other way, up a couple of basis points to around 4.95%. Last week we pointed out that the three-year and five-year points had become almost identical. That has now loosened: the curve is sloping upward again from two years out to ten, with the short end lower and the long end firm.
We should not overstate it. A fall of six basis points on the five-year gives back only about half of last week’s rise. The five-year is still higher than at any point before September and well above where it was in August. Two weeks ago we saw a fall of a similar size, and it reversed within a week. One reading is not a trend.
The more interesting question is what the quiet on the shelf means. Pricing set against last week’s swap levels would have gone up again. If lenders were holding off on that, this week’s easing gives them reason to keep holding. So the most likely result is that the reprice we expected simply does not happen, rather than that any of September’s increases are reversed. We have said before that lenders give rates back more slowly than they take them away, and we see nothing here to change that. A flat week after a rising month is what the early stage of a plateau looks like. It is not what an improvement looks like.
On sources, there is one useful development. Our secondary swap source has refreshed for the first time since mid-August, and its reading sits close to the primary one: within a few basis points on the two-year, several lower on the five-year and about a tenth of a point lower at the ten-year, taken a day apart. With a six-week gap it tells us nothing about this week’s direction, but it does confirm the level independently. That matters, because for most of September we relied on a single source.
The Budget at the end of October is now about four weeks away and remains the obvious next catalyst. Lenders did not wait for it earlier in the month; whether they are waiting now is not something one quiet week can tell us.
The practical reading is broadly unchanged. Pricing secured before the summer still looks better than anything available today. For a short fix maturing in the next year or so, the two-year point is the part of the curve that matters most, and it has eased this week. But it remains well above where it sat over the summer. We would still budget on the assumption of rolling onto something materially higher than today. This week’s easing makes that assumption slightly less pessimistic. It does not make it wrong.