Mortgage Rates Moved Upward Today

Mortgage rates moved upward today bringing them back where they were last week - but certainly within the range we have been in for nearly three weeks. The most prevalently-quoted conforming 30yr fixed rate for top tier scenarios was pushed solid to 4.125%, but depending on various fees 4.00% can still can be done.

The FOMC minutes this afternoon provided a moment of volatility. The minutes implied the Fed has no idea what to do now. The level of inflation is not moving up; under the headline the Fed is still fearing the lack of inflation. Yellen saying what is happening in Europe and China will not have any impact in the US for what the Fed will do, a bravado comment given in the past the Fed has been unable to control long term rates in the past when the FF rate is increased. Greenspan found that out when he began tightening in 2004 and the parade of low rates kept on marching lower. For all of the talk and opinions that are "rock-solid" when it comes to anticipating what the Fed will do, and when; this is the new normal. There has never been a time in the last 60 years when the Fed has been so active in moving markets, particularly the stock market. Who really knows what the eventual outcome may be when central banks face the reality of the fiat money printing that now has the Fed's balance sheet 4 times higher than it was 10 yrs ago ($4.5 trillion). For now the guessing will continue with hard lines between one outlook and another---for those that believe they know; all of the economists and stock market pundits and others including us, we have no history and no foundation for anything longer than a month or so.

Tomorrow there a few reports that normally increase volatility, however the bond market these days is immune to any volatility. After a very brief rally on the initial reaction to the FOMC minutes on the comment that inflation may stay low for longer than what is expected that took the 10yr back to unchanged on the day. The rally faded quickly and the 10yr back to 2.36%, up 4 bps today and MBS prices back to the level we saw early this morning. As long as this narrow range persists, it really depends on what risk you want to take. Floating can be a good thing and certainly can hurt. Like that broken record - the 10yr is still in its 19 day narrow range. We want the 10yr below 2.30% before we sniff out better rates.

In summary, today's trading was heavily influenced with overseas pressure. The Fed minutes brought a quick rally that disappeared just as fast. Through it all, we are still in the middle of the recent range, somewhat consolidating for a breakout. The breakout can go in either direction. I believe rates will move lower, however the right thing to do is lock any loan closing within 15 days here.

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.