Mortgage Rates Roughly Unchanged Today

Mortgage rates were roughly unchanged today.  The stock market continues to rally as the bond and mortgage markets remained quiet until late this afternoon. The bellwether 10yr note spent almost all day at 1.46% but in the final hour of stock market trading a little pressure pushed the note up to 1.52% and some minor selling in MBS markets. The UK vote shook markets with most everyone on the wrong side of the vote, believing there was no way the Brits would vote to walk. The reaction last Friday and Monday drove the DJIA down 871 points, it has now recovered about half of it as investors and money managers re-think the impact.

Time now to get back to overall economic outlooks, and they do not look good. Central banks impotent and the QEs have failed to achieve what the banks thought. Our Fed now also unable to act on its constant changing outlook and forecasts for more rate increases. From 4 rate increases touted by the Fed last December to now unlikely to increase at all this year. Global growth slowing with each longer term revision from the Fed, the World Bank and the IMF. What will happen in Europe was thought to be a weaker accumulative growth because of the UK leaving; may be the case but now after thinking calmly about it for a few days, it seems likely Germany, France and the UK should suffer this with still decent growth, the rest of the EU however likely to weaken.

We have been waiting for one small sign that the momentum might be waning and there's a chance it showed up late this afternoon with bond market weakness that may be seen tomorrow when bank price their rates.  This was the first sign of weakness.  This does not necessarily mean the weakness will continue, but it is the first "lock cue" I have seen since Brexit.  More aggressive folks with a bigger tolerance for losses would be justified in waiting until after the 3-day weekend to see how next month's rate environment shapes up, but if there is a chance to grab these great rates, why risk what you have.  The selling is not yet serious but with the sentiment currently relaxing over the UK vote some of the safety moves are lessening and being reduced. Technicals still bullish but the 10yr could move up to 1.54% to close the chart gap that occurred last Friday on the initial reaction to the shock of the UK leaving.

In summary, rates continue to hold in our recent tight range.  I do not see a big need to lock here, but I also do not see a big reason to float.   If you are happy with your current pricing, nothing wrong with locking based on today's rate sheets.  As always, rates rise much faster than they fall.