Mortgage Rates in a Holding Pattern

Mortgage rates again were steady as the most prevalently-quoted conforming 30yr fixed rate for top tier scenarios remains 4.125% - 4.25%, as closing costs associated with these rates were the only change. 

Another quiet day, MBS prices relatively flat on the day but slightly lower than when lenders priced this morning. All quiet in the bond and mortgage markets and not much noise in the equity markets either. The DJIA making another run at a new all-time high and the S&P pushing on 2000, both giving CNBC hosts apoplexy all afternoon as if every middle income person in the world is watching, pushing them into the markets. But middle income people don’t care and are smarter than the greed folks that want all of it. In the end the meek will inherit the world.

July durables were a jumble this morning, increasing 22.6%, as far as many can remember over the years there has never been that kind of monthly increase.  The housing data this morning wasn’t stellar but was not weak either.   Consumer confidence exploded, up to 92.4 the best since Oct 2007. We have little interest in the confidence of consumers or sentiment indicators because as we have noted, they are mainly measurements of how the stock market is doing. Consumers generally believe that if the stock market is increasing, it won’t be long before those good jobs appear.

This afternoon Treasury auctioned $20B of 2yr notes. The auction was OK, not excellent or bad.  Tomorrow Treasury will sell $35B of 5yr notes, we expect it will be well bid and indirect bidders will take a big bite (indirect bidders are foreign central banks and large foreign investors). As with the 2 this afternoon the US 5 yr has a higher yield than the equivalent 5yr in Europe’s economies.

In summary, another day of limited movement in rate markets, which is not a bad thing. The one month charts for both bonds and MBS show continued improvement. Until economic or geopolitical sentiment changes, we may enjoy further gains. As always, those close to closing or with limited/no risk tolerance could do worse than locking at current levels.

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.