Mortgage Rates Have Moved Higher

Mortgage Rates have now moved higher as the Mortgage Backed Securities (MBS) headed South, erasing any chance over yesterday’s positive movement.  As I mentioned earlier today, the weak data did not help anything as the roller coaster seems to be heading on its upward climb.  Any chance those still flirting with quoting 4.375%  mortgage rates today gave way to 4.5% as the most prevalently quoted 30yr fixed rates for the very best borrower scenarios.

The stock market rallied hard and Mortgage Backed Securities (MBS) prices took a hit; mortgage prices were looking heavy when the key stock indexes went from opening lower to improvements. Interesting though that the 10 yr note yield didn’t decline much in the face of the DJIA trading 124 points better; the 10 yield up 2 bps (-12 bps in price).  Typically, weaker economic results in bond market strength and thus lower mortgage rates, but the strength that followed today's weak Industrial Production report wasn't enough to offset the preexisting weakness.

When Yellen testified on Wednesday at the House Financial Services Committee she was not waffling when she said that she and the Fed were increasingly optimistic that 2014 would see increased growth. On the release of the industrial production and capacity utilization this morning, the Fed did comment that the softer data was a direct result of poor weather.   Yellen also stood firm in her comments that the Fed would continue tapering and be out of it completely by the end of the year, and she removed the emerging market concerns that hammered stocks and dropped interest rates two weeks ago. Surely when she is finally able to complete her semi-annual required testimony (hopefully next week) she will have to address the weather impact.   If the Fed still believes it is all weather that is slowing things down she will have to have solid reasons to back it up or be as good a salesperson as Bernanke was.  Until then investors will hang on her testimony this week.

In summary, yesterday’s strength did give us a reprieve, but after today, and the three day weekend ahead, the consensus is now making the case that the previous trend that carried rates lower into early February is over and the current trend has been a fairly steady push higher. Today could have cast doubt on that trend had it gone the other direction, but as it stands now, the momentum leading higher won out.  One could cautiously float, but locking seems prudent.

If you have any questions with regards to your financing, give me a call at 314-744-7806, or visit our website at www.CallTheMoneyMan.com.