Mortgage Rates Moved Higher Again

Mortgage rates have now seen 10 straight days of no improvement or moving higher as was the case today.  We have now moved to 4.25% as the most prevalent quoted conforming 30yr rate for top tier borrowers, and even then with some additional closing costs.

MBS were under immediate pressure this morning on a pull-back in "fear factor" pricing and strong Retail Sales and Consumer Sentiment reports. Adding pressure to all long bonds over the past several trading sessions is the growing shift in sentiment among traders that the Fed may raise interest rates sooner than originally projected.

Retail Sales - August Headline Retail Sales matched market expectations with a reading of 0.6%. Ex-Autos also matched expectations (+0.3%) However, July's data was upwardly revised from 0.0% to 0.3% which will cause some upward revisions to 3rd QTR GDP estimates and has provided some pressure to MBS pricing as a result.

Import Prices - Our strong dollar makes everything cheaper and oil prices have been dropping. It came in at -0.9% which matched expectations and Export Prices dropped -0.5% vs est of -.02%. The bond market focusses more on the Import Prices as an inflationary input cost. Certainly no inflationary concerns from this data point.

Consumer Sentiment Index -  The preliminary September reading hit 84.6 which was much stronger than consensus estimates of 83.2 and as a result, provided downward pressure on MBS pricing.

Business Inventories - Showed growth of 0.4% but matched the prior period's growth and expectations for this period. Not a major factor in pricing today.

Next week will be very key with domestic events like the FOMC meeting, CPI, PPI and Industrial Production. The FOMC meeting will be closely watched for any signs of a rate hike on the horizon and confirmation that their massive Treasury and Agency MBS purchase program will come to an end in October. The Scottish vote will also be very key. Its going to be a very big week with the potential for a lot of volatility.

In summary, if you are happy with your current quote, locking at application should be strongly considered. Rates have been moving quickly higher, in part, due to anticipation of potential changes in next week's Fed announcement.  Investors are wary that rate hikes may come sooner than later, which has increased volatility. Without clarity in the Fed's announcement, there is little to gain by floating in this environment.

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.