Mortgage Rates Moved Lower Today

Mortgage rates finally fell today, largely in response to the past two days of bond market improvement.  The reason for the delay was that most banks had been keeping their guard up ahead of today's key inflation data (CPI).  While it was true that a strong CPI report had the potential to push rates back to the highest levels since this summer, today's data was not strong enough.  In fact, most of the metrics were roughly in line with forecasts. October retail sales were in line with forecasts but not strong.

The tax bills continue to work through the processes. Tax cuts for individuals based on the Senate’s plan would be temporary ending in 2025 but the corporate taxes will be permanent. The Senate bill is putting healthcare into tax reform by including a repeal of Obamacare’s requirement for Americans to have health insurance. Both the House and Senate are working toward keeping the Republicans in line with changes and additions.

As I mentioned this morning, crude oil lower today adding a little to the decline in stocks today. Oil prices fell for a fourth session after data showed an unexpected increase in crude and gasoline stockpiles.

The stock market is not healthy, no backing and filling, no corrections to measure where investors are willing to add to their portfolios. A healthy market, as it increases, moves in thrusts that test the significance of upward momentum - without it the potential for a major decline becomes more likely. That said, I have been looking for the correction for three months and in that time the DJIA has increased 1500 points. What do I know…  I am just a mortgage broker.

Beside the tax plans, keep in mind the Fed is very likely to increase interest rates at its December meeting just a month from now.  With the inflation data out of the way, there is less immediate risk in the coming days.  That said, rates have yet to commit to a strong move below their best recent levels.  That means locking and floating should still be approached cautiously, but perhaps with slightly more room for optimism compared to the beginning of the week.  Whatever the case may be, the potential for a bigger move soon remains, but the odds have evened out a bit as to the direction of that move.

In summary, bond markets posted minor gains today, as more details and doubts on the Senate's tax reform proposal emerged.  Whether House and Senate can concur on tax reform (and whether the finished product would boost economic output) is far from a given.  The fact markets did not sell off after this AM's higher than expected consumer inflation data bodes well for rates, but we are still range-bound.  Float/Lock is a virtual toss-up, tie goes to locking.