Mortgage Rates Moved Higher Today

Mortgage rates moved higher to begin the new week as stocks and oil prices moved up from Friday afternoon's lows.   Today's increases cast a shadow on what had been shaping up to be a nice bounce last week. 

It has been the Day of the Fed, and the results pressured the bond and mortgage markets today, seemingly over-looking the February existing home sales. Fed regional presidents were all over today and all of their comments did not help the bond and mortgage markets today.  In fact, they all should just keep quiet and let the leaders of the Fed, the Fed governors speak. The comments today did not square with the data dependent trigger Yellen and other Fed governors continue to reference. The comments today then must include the view that those regional presidents are very bullish the economic outlook. Nothing has changed since last Wednesday’s FOMC meeting and Yellen’s press conference that implied another increase this year but there was no indication a rate increase may happen in April or even June. I am increasingly more focused on Fed governors and less on the regional Fed presidents that love the microphone and a speech. Traders in the FF futures market have a 7% chance of an increase in April and 38% chance in June.

This morning February existing home sales were reported over twice as weak as estimates projected, and only 30% of sales were first time buyers. The same rationale, no product but a new problem appears to be developing. The prices of move-up homes are increasing more rapidly than the lower end making it increasingly more difficult for those looking to move up. That and the overall lack of inventory continues to persist - homeowners under water or those who cannot find a home to buy. Markets ignored the very soft sales in favor of those regional Fed presidents today.

No major data tomorrow. I cannot stress hard enough regardless of the Fed comments, the economic data or global conditions the bellwether 10yr note that drives mortgage rates and prices, the models are still bearish. I have mentioned it almost every day for the last few weeks - to change the near term outlook the 10yr yield has to fall below 1.85% (1.92% today). Last week after the FMC meeting the bond and mortgage markets were bolstered and the yield fell to 1.87% but stalled and now pushing back into a more comfortable level.

In summary, technical levels in bond markets are rejecting a move lower in rates.  This may just be an interim pause before a decisive move lower, but after we broke above 1.84%, and failed to get back below that same level, it may be a confirmation of a new trend in rates higher.  This may cause some to panic, but generally speaking interest rates are near historic lows, locking in always removes the risk of tomorrow.  I am of the firm belief that we will see lower rates, and believe it is only a matter of time that this unravels.