Mortgage rates inched lower yesterday as global investors continued to flock to risk free U.S. Treasury debt securities. This has been a constant theme in the rates market recently. However, while benchmark Treasury yields have moved considerably lower in a short time, mortgage rates have failed to keep pace with the "flight to safety" rally.
A flight to safety happens when investors are nervous about owning risky assets like stocks, but do not want to miss out on earning a return on their funds, so they allocate money into risk-free U.S Treasury debt to provide a safe-haven AND an investment return. To remind readers, as benchmark Treasury yields fall, prices of mortgage-backed securities move higher, which allows lenders to offer lower mortgage rates. As Treasury yields rise, mortgage-backed security prices are led lower, which forces lenders to push mortgage rates higher.