Mortgage Rates Higher Again
Mortgage
Rates were higher again today, further eroding the large improvement
following the weak jobs report. On a
positive note, Friday's gains were so big that the week-over-week improvement
remains clearly intact. Most lenders are
still at 4.5% as the most efficient rate for the best qualified buyers
on conforming 30yr fixed loans, but 4.625% is straight ahead looking at us.
The
reason why the rates are higher came out in light of stronger economic data
this morning. In general, when scheduled economic reports are stronger than
forecast, it implies upward pressure on rates. Today was no different as the
strong data was certainly seen in underlying bond markets this morning, but
economic data isn't the only factor in rate movement.
Of
course there are other factors vary in the timing and magnitude of their
effects, but one of them -- the corporate debt market -- has been a major
consideration this week. When large companies have financing needs - they
sell bonds - and often also make other trades in bond markets to help manage
risks. Even though this primarily affects US Treasuries, Mortgage-Backed-Securities
(which are the true foundation of mortgage rates) tend to trade very closely
with these Treasuries.
Long
story short, some of yesterday's incremental weakness was about the first leg
of the corporate debt interference and some of today's seemingly inexplicable
late-day strength was about that process coming full circle. Even then, when
all is said and done with the corporate deals, the net effect should be
little, if any lasting impact on rates.
That
jives well with where we're at compared to Monday based on the economic data
we've seen since then (i.e. data has been moderately stronger and rates are
moderately higher). Additionally, it reinforces that upcoming data will continue
to be relevant for rate movement as markets consider whether or not last
week's employment data will affect Fed policy at the end of the month.
In
summary, yesterday's trend continued as we cut further into Friday's rate
improvement. December NFP aside, there
is still no conviction for rates to drop. Locking at application (if pricing
works for the loan) takes rate drama out of the equation. Until economic data
soundly confirms a floundering economy, which is hard to envision, there will
be little if any remarkable improvements on the horizon.
This
might now be the best time to give me a call about Reserve A Rate. To learn about this great “NO COST” program
and all of your financing needs, give me a call at 314-744-7806, or visit me at
my website by clicking on the link below:
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