Mortgage Rates Continue to Move Downward

Mortgage rates continued to move downward, even though it was ever so slight to come towards the low for the month of November.  The most prevalently-quoted conforming 30yr fixed rate for top tier scenarios is still at a range of 4.00% to 4.125% depending on fees with each quote.

We have now gone 16 trading days with very little change in mortgage rates and treasury yields.  The stock market also slowing and not much change over the last week, although equity markets continue to ignore anything that could be considered weakness in the economy and global economic conditions. This morning October leading economic indicators were weaker than forecasts, industrial production and capacity utilization for October also not up to forecasts.

We still hold that rates are more likely to decline than increase. That said, although we believe rates will decline a little soon, we are not that confident to arbitrarily float mortgage loans until the bellwether 10yr note can close below 2.30% - when (if) that happens expect rates to work lower with the 10yr declining to 2.20% and MBSs down about 8 bps in rate from current levels. Not much for MBSs so thinking about floating or lower rates is not likely to change mortgage rates that much. Just do the deals and don’t obsess on waiting for lower rates. Those are my thoughts but I admit I am going against the tide of economists’ and analysts.

In summary, today is a great example of the market being range bound. We started the day testing the lower realm of the recent range, which was quickly rejected and we started trading back to the middle of the range. In my opinion this is good, as long as we don't break above the upper support level of the range, as the range serves as a guide to determine day to day rates. We can put a few numbers on it, but generally I would say 2.30-2.40% (rounded up/down) on the 10yr treasury bond. Floating is a great scenario within this range to buy time to be within a closer date of closing to reduce the costs associated with your rate.

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.