Mortgage Rates Heading Lower

Mortgage rates fell today after slowly being pushed upward to their highest levels in the last 30 days.  Treasuries got a nice boost today on a weak consumer confidence index from the Conference Board suggesting consumers are less enthusiastic than a month ago. Could be that crappy weather, not too enthusiastic here at my office with snow up to the windows a few weeks ago and temperatures in the single digits, and we will not even mention the wind chill.  Not new that weather has played a big part in slowing the economy, the larger question is by how much? As we have noted previously, it will take until April when markets get data from March to better assess the economy.  Today we did get closer to  4.375% being the most prevalently quoted 30yr fixed rate  for the very best borrower scenarios, but 4.5% still seem to be the best rate

A number of people are concerned that the US economy isn’t what it is touted to be.  A lot is made about the unemployment rate down to 6.6% but the jobs created are at the very low end of the pay scale.  The unemployment rate is a statistic that can be what the Fed and Wall Street want it to be, but if the Fed really believes this is a normal economic recovery its memory must be exceptionally short.  The housing sector is slowing.  This might be the weather but unless incomes are on the rise (and they are not) affordability is declining as first time buyers amount to just 26% of mortgage applications.  For all of the Fed’s support with QEs and monthly purchases the recovery is the slowest seen since the Depression.  Keeping interest rates low as the Fed is doing is working against the Fed’s inflation target at 2.0% and adds to the slow growth, there is no reason to rush to buy.  In fact deflation (if it gets a grip) will make it more advantageous to not spend. Most every economist and every Fed official will deny to their deaths that they are concerned about deflation but that doesn’t mean they don’t worry about it---just won’t admit the possibility.  I suspect these are a couple of issues now bothering investors.

In summary, a good day with Mortgage Backed Securities (MBS) as both treasuries and MBS posted solid gains.   Consumer confidence came in slightly below expectations. It looks like we might be heading lower, but like I always say, consider the risk and see if it weighs the reward. Most consumers and lenders hope that break is down not up – so I am going to recommend cautiously to float.

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.