Mortgage Rates Continued Lower Throughout the Day

Mortgage rates continued lower today.  This roller coaster now seems to be heading downward as we had a little climb for the past two weeks and have quickly retreated to our floor again.  The most prevalent quoted rate still seemed to be 4.5%, but not only was 4.375% within reach, 4.25% became more viable if we continue on this path for a conforming 30yr fixed rate for the very best borrower scenarios.

Who can really predict the economic outlook with any degree of accuracy in this slowest ever recovery? Not many as far as we are concerned. This morning another unexpected surprise on a key economic report.  January new home sales were expected to be down about 3.4%, sales actually increased 9.6%.  Who would have thought with existing home sales last week  weaker than expected, housing starts weaker and permits not so good, mortgage applications continued to decline and January new home sales exploded higher.   Strong economic data normally pushes rates higher.  Especially right now, with the winter weather being a popular excuse for weak economic data, it would have been fair to expect that a strong showing in today's Housing data to make things quite a bit worse.  But it didn't happen.

We did experience weakness after the Home Sales report, but were ultimately other factors, especially the afternoon's strong 5yr Treasury auction, came into play.  While Treasuries do not dictate mortgage rates, they do set the table for what may happen down the road.   Much more could be said about this, but the important part is that trends can emerge when something like this starts to occur.  We have another round of auctions tomorrow and we can see if this pattern continues.  But do not forget we have a wild card that could be played with Janet Yellen's rescheduled testimony with the Senate Banking Committee.  Like her predecessors, when they talk, anything can be easily overpowered  depending on what she says.

 In summary, whether investors are moving to treasuries as a hedge against a potential decline in stocks or because of increased tensions in the Ukraine, the result has been better interest rates that have confounded most analysts in the last few weeks. As I have noted for two weeks, go with where the money is going in the near term and not what the news reports are saying.  The 10yr note has never shown a bearish technical reading since the end of January.  Certainly not much improvement but as selling continued to diminish the 10yr and now Mortgage Backed Securities (MBS) are looking better.  The wider look though still remains bearish when measured on a two month outlook and longer.  That will continue if the economy rebounds from the worst weather in many years that slowed spending and likely slowed employment.  I remain leery about the economic outlook as I am not on the same bullish page as most of the economists and analysts.  There is the opportunity for some more gains the next two days, but float with extreme caution and be prepared to lock.

Remember, if you want to know the benefits of locking your rate today versus floating, simply give me a call at 314-744-7806 or visit me on my website at www.CallTheMoneyMan.com   I have access to real time Wall St. data and instant market alerts with breaking news that I monitor throughout the day to assist us on making the informed decision.