Mortgage Rates Fighting Resistant Levels Again

Mortgage rates seems to be fighting the resistant levels again this morning.  March housing starts did not meet the expectations after dropping in the month of February.  Permits were also released, but that figure was as expected as weather had a factor in those numbers.  The housing sector continues to disappoint but the data on housing recently is mixed, some good, some weak. In February new home sales were the highest in seven years.

Weekly jobless claims were thought to be about unchanged from the previous week, but did come in a little bit higher, but stayed under the magic number of 300K.  Claims recently have been volatile, even though overall they are at the lowest levels in fifteen years.

Interest rates in Europe continue to fall, as terms less than 10 years in most countries are now negative, putting money in sovereign’s costs depositors to store the cash. One take away is that as rates continue to decline it will drive consumers and businesses to spend rather than pay to hold money. So far that is not working as Europe’s economies with the exception of Germany are continuing to struggle. Even Germany’s data isn’t that robust. The US 10yr has smacking up against what is serious resistance at 1.86% - since March 26th the note, no matter the data or circumstances, demand dries up quickly when the yield approaches that level.

In conclusion, weekly claims higher than expected, housing starts weaker than expected, permits weaker.  Just out was the Philly Fed data, and that came out with a mixed picture. Nothing today has moved the rate markets. The IMF and World Bank meeting beginning today. At 10:00AM, the 10yr unchanged from yesterday with MBS prices are a little bit lower from yesterday’s close.   My thoughts right now is to recommend taking these rates if you are closing in the next 15 days or so, but there is too much money left on the table if you are closing more than 30 days from now – in other words, everything we have seen is meaningless for the moment as rates are flat-lined for the last several weeks now. I will say in the last 20 minutes while I was writing this, the 10yr has jumped to 1.92% and the MBS have dropped a little bit more than earlier today, so my recommendation is more solidified with what is happening as I post this.