Mortgage Rates Basically the Same

Mortgage rates were basically the same as they were yesterday as we inched a little bit more towards the lowest point for 2014.  The most prevalently-quoted conforming 30yr fixed rate for top tier scenarios remains 4.125% - 4.25%, as the closing costs associated with these rates were the only change. 

Interest rate markets continue to slowly fall, but we have to look close to see it. The 10yr has declined from 2.45% on 8/21 to 2.36% this afternoon.  The rate markets are moving in slow motion these days-almost all the changes in price and rates is happening overnight based on Europe’s movements. The ECB is the elephant, the bank is very likely to launch another QE as the economy there is weak and getting weaker, resulting in interest rates falling on all sovereign debt in the G-7 countries and putting US rates at the highs when compared to other global rates. That is the driving force now that keeps our rates sliding. Most all of it in treasuries, with MBSs following along but not changing as much.

The fear though is that the wider outlook for interest rates is still for rates to move higher - making holding long bond market positions somewhat nerve-wracking. Looking at the position reports there is still a huge short position in the US bond market, longer term investors such as insurance companies and large hedge funds remain bearish, that is also a worry for shorts. At some point if rates fall to some level - below 2.30%, those shorts will be squeezed out like a tube of tooth paste run over by a car. No matter the way it is framed - you cannot ignore the market reality, treasuries are declining and taking MBSs down with them.

Today there were no economic reports to think about. Treasury sold $35B of 5yr notes with the auction going well and somewhat better than last month’s auction. Tomorrow a very key is the preliminary Q2 GDP data.

Still keeping an eye on geo-political events, and there are a number of them - but presently they are having little market impact. Investors and traders are comfortable for the moment just watching but less fearful.

In summary, rates dropped a bit today but tomorrow we get hit with some data which can shake things up. Long term I do believe rates will gradually decrease but if you are looking to close in the coming week or 2 locking ahead of tomorrow makes a lot of sense.

Keep a strong look at the markets and continue to cautiously float if you do want to take a risk. 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.