Mortgage Rates Are Falling

Mortgage Rates are falling, unfortunately not as fast as most would like and this certainly can turn around quickly if someone sneezes in Washington.  For the most part, the long-standing conventional wisdom is that bond markets tend to benefit when stock markets are suffering. This has not been the case in the last five years, but for the past eighteen months, it sure seems like this has been the story that has unfolded before us.

After trending lower due to the soft December employment report, some additional economic worries have helped mortgage rates to fall further.  A preliminary January report suggests that growth in China may be slowing more than was expected, which has implications for many economies around the world that depend upon exports. This is coupled with a Federal Reserve that intends to provide less economic support going forward, which could exacerbate the slowing. Sensing this, many investors decided that it is safer to stash money in Treasuries, driving yields and mortgage rates lower.

This weakness in equities and foreign markets continues to promote strength in US bond markets, including the Mortgage Backed Securities (MBS) that most directly influence mortgage rates. This further solidifies 4.375% as the most prevalently quoted conforming 30yr fixed rate for ideal borrowers, as some have even gradated to 4.25%.   

This roller coaster that I keep describing is coming to a strange curve this week as we have another Jobs Report coming out on Friday.  Will there be major revisions from last month’s surprise?  We have seen the 10yr Treasuries drop to a low of 2.58% today bringing the Mortgage Back Securities (MBS) with it, but not as fast.

In summary, the rate sheets seem to want to go into the lower levels, but have hedge breaking the floor that we are now hovering.  I am still suggesting to FLOAT, but when it comes to rates, there is always a chance that they can go up faster than they have come down to this point.  I have a feeling that the odds are greater that we will see them INCREASE sometime this week and I would consider strongly keeping your finger on the LOCK button if anything changes.

If there is anything we can do to assist you on your financing, give me a call at 314-744-7806, or visit the website www.CallTheMoneyMan.com.