Mortgage Rates Showing No Movement

Mortgage rates today opened unchanged from Friday morning, as they are showing no signs of much movement. There are no pertinent economic releases today, but the way the markets are trading, they seem as if they are pointing to higher rates. And of course, interest rates depend on speculation about political instability in the world - uncertainty and fear pushes rates lower.

Where Are Mortgage Rates Going?                     

>>> Rates are moving up

The week after the monthly jobs reports gets released is historically a quiet one, so we could see rates remain in a fairly tight range over the next few days. There is basically no significant economic data out today in the U.S., plus it is a banking holiday in the U.K., so the markets are not moving too much this morning.

This week inflation shows April PPI on Wednesday and CPI on Thursday. Treasury will be conducting its quarterly refunding with new 10-year and 30-year Treasury notes, as the demand will carry a lot of weight. Recent Treasury auctions have been moderate in terms of demand with markets expecting higher rates ahead. At the long end of the curve rates in the last two weeks have been mainly unchanged, moving up and down in very narrow ranges. Crude oil, one gauge of inflation, is continuing to rise contrary to what most were thinking. Brent crude at $74.00, WTI crude $71.00 - gas prices in most areas now over $3.00. One of the concerns in the oil market now is the increasing possibility the US will exit the nuclear deal negotiated by Pres. Obama and John Kerry.

Trade concerns remain key to economies. The EU is mulling the option of tolerating quotas on metal imports to the U.S. in an effort to avert a trans-Atlantic trade war. A condition for such a deal would be that any U.S. limits on steel and aluminum from the 28-nation bloc be set at levels no lower than its 2017 shipments to the American market.

A lot of discussion is still coming from the Jobs Report on Friday, especially how the 10-year Treasury note reacted.  Yes, we did see the yield on the 10-year Treasury note (the best market indicator of where mortgage rates are going) slide lower immediately after the report came out, but by the end of the day it had climbed buck up to where it started.  Currently today, we are seeing it not moving much at 2.95%.

Rate/Float Recommendation           

>>> Best to lock than lose what gains have come thus far

Over the last two weeks mortgage rates have traded in the same channel. There is no compelling reason to hold rate locks or delay locking in client’s applications. The big piece of economic news that could cause volatility and push mortgage rates out of the channel comes on Thursday with CPI. Other than that, it will take an unexpected geopolitical event to push rates significantly.

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.