Mortgage Rates Moving Higher After Existing Home Sales Report

Mortgage rates are continuing to increase this morning after the March existing home sales report showed a better number than what analyst had forecasted.  The markets had opened relatively flat after we got a significant push higher last week after investors caught wind of hawkish comments from several Federal Reserve officials. With Treasury yields lingering at a potential tipping point (still at 2.98%), investors are on the edge of their seats right now as they wait and see how the situation unfolds.

Where Are Mortgage Rates Going?                      

>>> Rates are moving up

The focus for financial market participants is on the bond market, with the yield on the 10-year Treasury note (the best market indicator of where mortgage rates are going) approaching the crucial psychological threshold of 3.00%. A breach of this level will open the door wider for selling of bonds and increased expectations - rates will move higher as inflation and increasing growth and earnings will add to the already strong sentiment that rates will adjust higher. Three months of generally sideways movement is defined as balance. Generally, a market will move quickly when a balance is upset, pushing those on the wrong side out of their positions.

Right now, the yield is at 2.98%. That’s up nearly fifteen basis points from where it was this time last week. Trade fears are relaxing a little as the clock ticks.

Housing data has a lot to think about this week, with today’s March existing home sales and tomorrow March new home sales. With the good news on this morning’s data, the reaction was disappointing, pushing MBS prices lower and the 10-year Treasury trying to push up its yield. Sales are better, but we see no reason for rates to react negatively other than the current increase in the bearish bias.

From the looks of the economic calendar this week, there are a handful of reports out that could impact the direction of mortgage rates. Most notably, we have the first estimate for first quarter GDP out early Friday morning. The consensus from market analysts is for GDP to have grown 2.0% from the previous quarter. That’s down from the previous quarter’s 2.9% rise but would still be a comfortable reading for investors.

Rate/Float Recommendation           

>>> Lock now before rates move higher

Mortgage rates have jumped up once again and the spike might not be over just yet. With the yield on the 10-year Treasury note sitting just under 3.0%, investors are waiting to see what happens. If we cross that line, then it will more than likely trigger another bond sell-off, causing the yield to jump further still. Mortgage rates typically move in the same direction as the 10-year yield and, as such, are also on the verge of surging higher.

If you want to avoid the risk of locking in after this happens, you should lock in your rate now. Despite what happens in the near-term, mortgage rates are still expected to move higher in the long run so locking in a rate sooner rather than later remains the smart decision for most borrowers. If you have any further questions, give us a call or visit our website at Call The Money Man.