Mortgage Rates Continued Higher Today

Mortgage rates continued higher today adding to a losing streak that has only seen one day of improvement covering almost two weeks.  The most prevalently quoted conforming 30yr fixed rate for best-case scenarios is pushing 4.375% for the second straight day. 

While yesterday's trading activity didn't really make much of a statement about the current state of events for mortgage rates, today confirms recent moves higher.  In other words, we could have held out some hope that markets were just digesting last week's big events and that rates might still snap back lower.  Today builds a case against any quick moves lower, and begins to make last week's only positive day for rates look like an outlier in an otherwise determined trend higher.  

On a positive note, we are not seeing any huge movement in either direction for now.  That decreases the pain involved in missing the opportunity to lock.  It also limits the incentive to float.  That said, most every technical study we use is bearish at the moment.  Why then do some believe rates may have another run down, maybe to test the recent low on the 10yr at 2.40% (2.63% now)?  As many of you that read this regularly we have ben periodically commenting that the US stock market is headed for a huge pull-back and maybe turn into an outright bear market.  Way too much made of the job increases, low paying jobs are not building blocks for a growing economic outlook.  Central banks have about run out of ‘tools’ to keep investors tied to equity markets. There is a wide global move into fixed income sovereign debt, one of the last vestiges for investors hungry for more.  The US housing industry is terrible and there isn’t much likelihood it will get much better anytime soon.  You know the reasons; first time buyers are not interested, credit is tight and with banks under the gun credit isn’t going to get easier, down payments are high and would-be buyers can’t save enough to buy, no incentive with no price appreciation now or in the foreseeable future.  The current bullish outlook and sentiment about economic growth is too excessive given the hurdles facing the US and global economies. No one wants to hear it, but the foundations under this present economy are like the three pigs - not built of bricks, but straw.

In summary, the last couple days have not been good for mortgage rates. We did have a pretty solid treasury auction today but tomorrow's 10 year note auction is much more important. With the amount of losses over the last couple days, some are saying to float while I decided to go ahead and lock as the market is a bit too volatile and the risks are much more than the reward.