Mortgage Rates Found Some Better Footing Today

Mortgage rates found some better footing today after two days having the rates climb upward at its quickest pace in months.  The most prevalently quoted conforming 30yr fixed rates for top tier borrowers was solidified more towards 3.875%, but 4.00% was still out there with no fees attached.

It is time to relax after a very rough week in terms of volatility in about every sector of the markets.  This week is the last with full trading complements as large institutional investors, many hedge funds and lots of traders have packed it in for the year.  The less attendance however won’t end the volatility that has been the keystone for last two weeks.  Market activity the final two weeks of the year has additional elements, yearend positioning regardless of longer term expectations usually feeds into the first week of the New Year because those “parking” trades are meant just to protect against wide swings on less volume.

Treasuries and MBSs improved a little today, the 10yr successfully held its first support level at 2.20%/2.21% yesterday and today closing at 2.16%. The gap between our 10-year yield and the average of the G-7 peers was 93 basis points, almost the highest since 2007; the gap between US and German 10s 157 bps. No easy way to make the present economic and market conditions a simple explanation, but as long as the gap between US and global rates is that wide the US debt will benefit. Not necessarily driving interest rates lower but making sovereign debt purchases in the US superior to any other sovereign debt in terms of ROI.

In summary, there were no significant headlines or events to motivate the markets.  As we saw the rates find better footing today, I would recommend locking if you are closing in the next 15 days.  With the volatility we had after the FOMC meeting, movement in the wrong direction can happen at any time, and one might want to just grab these low rates as the risks is a bit much to swallow than the rewards at this time.  With Christmas/New Year’s happening the next two weeks, I do not expect any ground breaking moves during this period.

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 my website at www.CallTheMoneyMan.com. I have access to real time Wall Street data and instant market alerts with breaking news that I monitor throughout the day to assist us on making the informed decision.