Mortgage Rates Continue to Creep Higher

Mortgage rates continue to creep higher today as we are now approaching the high water mark for the month.  The most prevalently-quoted conforming 30yr fixed rate for top tier scenarios was pushed solid to 4.125%,   but depending on various fees which I do not feel makes sense anymore, some still want 4.00%.

Choppy trading today in the bond and mortgage markets but rates continue to slowly creep higher, taking out one after another technical support levels on the 10yr note.  A slow snail pace increase has taken the 10yr from 2.20% 10 days ago to 2.38% at its high this afternoon before ending the session at 2.35%. Solid October manufacturing data this morning with the ISM manufacturing index increasing to a big 59.0 reading from 56.6; general forecasts were for the index to decline a little to 56.0. On the other hand, Sept construction spending continued its slump, down 0.4% against consensus +0.6%; August construction spending fell 0.8%. Investors choose to pay less attention to weak data and pile on better reports. Meanwhile in Europe and China the economies continue to slow, about the only place in the industrial world that has some positive growth is the US.

We continue our view interest rates will not increase a lot through the remainder of the year; no inflation and the ECB will launch another stimulus package when the bank meets on Thursday. So far Mario Draghi is the odd man out on stimulus after Japan announced a super-sized package last week. Weak global economies are not going to revive anytime in the near future that will keep interest rates from increasing much.

In summary, this week has the potential for some significant movement and so far things have not started off in a positive direction. A lot can change, however, as we have the Jobs Report on Friday, European Central Bank activity on Thursday, and other data points to be released as well as continued fallout from the Bank of Japan announcement last week. All of this presents uncertainty so a bias towards locking seems to be warranted, but if you float, do so with caution.

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.