Mortgage Rates Moved Lower Today

Mortgage rates moved lower today, relative to the recent days when it was trying to “think” about making this nice move.  Ever since the October Employment Report, we have seen a spike in rates to the highest levels in four months. 

Jobless claims came in as expected, but the Philly Report came in better than anticipated, but this did not phase the traders as this report has become anemic as of late. 

In the bigger picture, the financial markets that underlie mortgage rate movement are coming into the official holiday season.  This is important because it decreases the liquidity in the secondary mortgage market (liquidity can be thought of as the level of activity in a marketplace--more to do with the availability of numerous buyers and sellers than the amount of dollars traded).  Amid less liquid conditions, imbalances between buyers and sellers are amplified.

The State Dept. today issued a warning to Rome that another attack on St. Peters may be coming. Jeb Bush out calling for “boots on the ground” in Syria and Iraq. The threat of more attacks is one reason the US treasury market is holding well. Not a big move to safety but a reason not to sell them. Obviously a developing story with no actual plans, enough though to keep markets edgy for the moment. Russia, a friend of Iran also talking tougher about ISIS. Technicals generally still bearish but it will not take much more improvement in treasury prices to turn the market more bullish. A close under 2.22% on the 10yr will change a lot of minds.

In summary, alot of smart people believe that even though the FED will be making moves in the immediate future, long term borrowing costs will remain suppressed for the foreseeable future.  I am also in that camp, however the unfortunate truth is that nobody knows what will happen.  What we do know is the market has been trading in a very tight range following the recent rise in rates and any days of improvements should be used as an opportunity.  If you have time to wait it out, then you have a commodity that most people are not privileged with.  I am partial on floating all loans that have time value, but for anything closing within 15 days, I might again be leaning to lock, but again, I will wait until tomorrow morning to see what the markets will bring us.