Mortgage Rates Again Unchanged

Mortgage rates stayed mostly steady today, even though like yesterday, they mortgage bonds started out strong but faded throughout the day.  While it seems that rate volatility has died down significantly for now, the more recent an episode of major volatility, the more susceptible rates can be to aftershocks.  It could easily be the case that we see no such aftershock, but right now, I am not yet ready to trust this recent rate ceiling and hope for improvements.

If we do see improvements, more than likely they will be short lived and self-contained. The biggest reason is that the financial world must wait for one of two things before rates have a chance of major improvement.  We either need to see some big shock or we will simply have to wait for clarity on Trump's policy path.  And we really cannot possibly get enough clarity about the policy path until Trump actually takes office. 

Tomorrow we get a number of economic reports and then everyone will scatter to the roads and off to get some Turkey.  If nothing has happened by Noon, then nothing will go as it will be thin on the trading floor.

In summary, the magnitude of recent bond market panic means the default game plan for new applications has been to lock for 45 days. It also means we could see a lull that allows risk-takers some room to strategize.  Rates have already leveled off enough that I would consider taking my finger off the panic button if they can show me a few more days of stability.  From there, I would want to see some improvement coming out of the holiday week when volume picks back up and especially into early December before getting too excited.  As a proxy for mortgage-rate momentum, if 10yr Treasury yields were to break above 2.40%, I would be reaching for the panic button again very quickly.