Where are Mortgage Rates and MBS Going?

Today mortgage rates likely remain flat with most lenders.  Some have begun to show a better rate, but beware of the extra costs to get that rate.  The Mortgage Backed Securities (MBS) are trading at a level that is not sustainable on a near-term basis – there is simply nothing on the radar today that can really hurt our pricing today. 

Yesterday interest rate markets improved, the 10yr fell 4 bps to 2.70% and 30 yr MBS prices gained 35 bps in price.  This morning no follow-through early; the rate markets remain range bound within an extremely narrow range, no direction but the outlook is a little better.  This morning the stock market is better, still the S&P has not been able to close in a new all-time high.  From everything we are hearing and reading investors in stocks, even the most optimistic, are worrying that after the huge run up in 2013 the stock market may be momentarily running out of momentum.  That view is likely why the interest rate markets have bucked the obvious and not increased.  Although interest rates have held well for the last few weeks, there hasn’t been any significant change in rates; how much longer will the tight range remain is dependent on what happens in the equity markets.  If the S&P closes at a new high and holds it for a day or two it will take away some hedging by investors that are holding treasuries currently.

That being said, holding out for any real gains over yesterday’s close is tough to justify.  The reasons may be murky and debatable but the market is where talk ends and money takes center stage.  While some are calling to float, I still remain that you can cautiously do such, but I recommend those to lock if your closing is in the next 30 days.

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.