Mortgage Rates Gave Back Some Gains from Yesterday

Mortgage rates moved higher over the course of the day today as financial markets underwent a correction following yesterday's big move lower in rates.  Some banks did not want to release all of its gains and were glad they did such as the market gave some back later this afternoon.

Naturally, the burning question at the moment has to do with the permanence of yesterday's strength. Which moves are real and which moves are corrections?  While a case can be made to suit any level of optimism or pessimism, you would have to be extremely pessimistic about the rate outlook to consider this afternoon's trading levels to suggest anything other than solid progress in the battle against February's weakness.  In other words, if you look at where we were in the first week of March, and even where we were on Tuesday, today looks great in the bigger picture.  In fact, there was a reason why I stated this morning to “Lock and Load”.  Everything is done on computers these days, but this expression is given out to everyone as it was the old way to get the rate sheet wrote up and loaded into the fax – and hoped that the fax on the other line was not clogged up with everyone doing the same thing.

Bottom line, it's too soon to rule out that trends bounced back in our favor so far this month  European markets certainly hint at that, and European markets have been a key consideration recently.  In terms of the lock/float stance, this means that if you were already inclined to float and understand the risks, then you're not crazy for doing so.  But the increased volatility in general means that you can never assume the rates you are looking at right now will be available a few hours from now, which of course, favors a lock bias.

In summary, March Madness came a day early yesterday in the form of the culmination of the 2 day Federal Reserve meeting and Janet Yellen's and the Board's dovish remarks and statement. And the Madness was excellent for rates. Best levels in weeks. We have given some of that back but it was to be expected after such a big move yesterday. I think we are in good shape right now. Once the dust settles, we should be able to evaluate the trends direction even better.  With today's damage, we are still better than where we started yesterday.  This morning I suggested locking, but now I am recommending with the give back to cautiously float and let’s see what happens.