Mortgage Rates Staying in Tight Range

The holiday theme continued today, even though we are seeing an active MBS rally as we closed with a positive 25BPS, the 10yr is holding at 2.54%.  It seems like all the trading is staying within a very tight range before every one heads out to grandma’s this weekend.

As I have stated before, and it will more than likely continue into next week, the lighter volume and liquidity associated with late December trading makes it easier for imbalances to have an effect on trading levels. Even though the rate markets were better today, there is no direct reason other than preparing for the long holiday that for many will begin tomorrow and go through Jan 3rd. Stocks a little weaker, no 20K today, and supported the better bond and mortgage markets. The dollar also ending its increases but not the trend.

November existing home sales this morning were better than expected.  Resales of single-family homes slipped 0.4 percent in the month but the 4.950 million rate is the cycle's second highest, next only to October's 4.970 million. Condo resales were the strength of the November report, up 10.0 percent to a 660,000 rate. Year-on-year rates, which have barely been in the plus column this year, jumped sharply benefiting from easy comparison with November last year when new mortgage documentation rules slowed sales. Total resales were up 15.4% in November with single-family resales up 16.2% and condos up 10.0% (the same as the monthly change). Supply continues to be thin, a factor that is driving up prices. Supply fell a very steep 8.0% in the month to 1.850 million which is down 9.3% year-on-year. The median price rose 0.3% higher in the month to $234,900 for a year-on-year gain of 6.8%.

So far this week the existing home sales this morning was the first of the November data. Tomorrow markets get a number of key reports, and on Friday November new home sales and the final monthly U. of Michigan consumer sentiment index.

Economic data is always very important for markets but currently with all of the attention of markets is the Trump rally. Weaker than expected data tomorrow will have its due but unless GDP or income and spending are way weaker market reaction will not be substantial.

In summary, even with the little price improvement we have seen in the last few days (and mainly in the fees charged for the various rates), I would stay locked on all new applications unless you have some time to see what happens.  Unfortunately, the volatility that looms out there is nerve-boggling  and I do not like to play with my client’s livelihood.