Mortgage Rates Steady - Failed to Continue the Momentum from Friday

Mortgage rates were steady today, largely maintaining the improvements seen last week. When rates fell last Friday, we were looking to the current week to confirm the potential shift in momentum.  Today's minimal weakness, at the very least, suggests the previous trend toward higher rates from mid-April has shifted into a more sideways pattern.  It is still too soon to conclude that we are witnessing a full-on reversal toward positive momentum.

This morning we did not see much reaction to the good housing data from NAHB.  Basically, the data showed stronger sales, higher traffic of those wanting to buy, and that first time home buyers are now coming out more than renting.

Last Friday in the WSJ “The Next Hot Housing Market: Starter Homes”. Some 854,000 new-owner households were formed during the first three months of the year, more than double the 365,000 new-renter households formed during the period, according to Census Bureau data. It was the first time in a decade there were more new buyers than renters, according to an analysis by home-tracker Trulia. The return of first-time buyers is accelerating. In all they have accounted for 42% of buyers this year, up from 38% in 2015 and 31% at the lowest point during the recent housing cycle in 2011, according to Fannie Mae, which defines first-time buyers as anyone who hasn’t owned a home in the past three years.

The recent increase in crude oil prices has added to buying in equity markets. Crude trading at a two-week high after a huge price decline three weeks ago.  What we are seeing is supply vs demand – all short-lived.

Another technical failure at 2.32% for the bellwether 10yr note today as it closed at 2.33% today – as we had hoped for it to push lower.  We have held on all day but no bounce so I will check the data tomorrow – but I might be in a short-term locking mode again.

In summary, bond markets retained Friday's sizable gains today, but failed to post further improvements.  Aggressive borrowers may want to float here, but those without a penchant for risk are getting the best pricing in a couple of weeks.  I have locked a few today, but there may be more room for improvement unless you are about to close.  There is very little in terms of data and speakers this week that can move the pile in one direction or another.   However, if such, do so with caution as there can be a move that you may not want to see.