Mortgage Rates Hold Steady

Mortgage rates held steady today, leaving them just above the lowest levels seen in nearly three years.  Market conditions were somewhat volatile surrounding a weekend meeting in Doha regarding potential changes in oil output.  Oil prices fell precipitously to begin the week as producers failed to reach an agreement.  The bond and mortgage markets in a broader look have not changed much for over two weeks. There was a lot of volatility in Asian markets this morning but by the clock ticked around to the US all of the volatility had lessened.

Tomorrow March housing starts and permits will be out and are expecting the same numbers we saw in February.  As long as the mortgage market stays in the present tight range and the 10yr note holds between 1.70% and 1.80% there is not much benefit to floating.  That said the technicals still not bearish until the 10 breaches 1.80% - still a fractional bullish outlook but that is more a fundamental view.

Should you lock?  With rates near recent lows and some apparent resistance to further improvement, locking is a more compelling option than it had been a few weeks ago.  What about floating?  There's a place for that strategy as well, as long as you understand the risk that markets could move against you and you are prepared to lock at a higher rate if markets move too much. 

In summary, MBSs have fared very well vs the benchmark 10yr US Treasury note.  With low to negative interest rates in many major world economies, I am a believer we are yet to see the bottom on domestic rates, as it is only a matter of time.  The trouble is, when will it happen if it does?  Be careful if you are floating as this stagnation is truly bothersome.