Mortgage Rates Improved Today

Mortgage rates improved today.  The range in question is small in terms of rates - stretching only from 4.125% to 4.25%.  Most of the day-to-day movement takes place in the form of closing costs (because lenders tend to offer rates in .125% increments).  So today's most prevalent rate quotes are the same as yesterday's (4.25%), but with slightly lower closing costs.

Stress in the stock markets has bolstered an increase in some safety moves into treasuries, MBS prices riding along but most of the action is in treasuries with the 10yr note rate at one point declined to 2.56% from 2.62% yesterday.  Is this the beginning of the long overdue correction many traders have been expecting?  Hard to tell but in the past when the key indexes came under selling pressure it didn’t last more than a day or two, then it was onward and upward.  Interesting that today stocks were soft but there is a belief that increasing interest rates would be good for the stock market and the economy.  In a minor sense yes, increasing rates might speed up spending on housing and other large purchases; and stoke more out of the stock market, but the risk of believing that high rates will help the economy is more wishful thinking than reality.

So far this week we haven’t had any hard data, tomorrow though the FOMC minutes from the 4/18 FOMC meeting will be out. Always has a little meat on the one to chew on.

All focus now is on the stock markets - is this the beginning of a major decline, or just a burp like the markets have had a number of times over the last six weeks? We have been expecting it as our regular readers know, we have been fooled a number of times also. This time may be different, based on what we are hearing and reading the bulls are losing some confidence---still talking the talk but with a tone that suggests a decline it is a buying opportunity---kind of expecting it. The timing for a major decline is curious now - ahead of all the earnings reports due over the next three weeks. Q2 earnings are rear view mirror looks but the guidance that is expected is where we have to focus.

In summary, with stocks weaker for a second day in a row mortgage rates improved again amidst a quiet week in most respects as far as economic data releases are considered. Recent moves have not taken us out of the persistent range we've been in which tends to support a locking bias for those with short term time horizons. For those with longer time frames, a floating stance with a keen eye to the markets.