Mortgage Rates Moved Sideways - No Clear Direction

Mortgage rates moved sideways again today as it seems like there is no clear direction on which way this market wants to go.  The Mortgage Backed Securities (MBS) that most directly affects mortgage rate movement spent some time in both positive and negative territory, even with the stock indexes rallying strongly throughout the day.  The most prevalently quoted 30yr fixed rate for the very best borrower scenarios still remains at 4.5%.

The DJIA has increased 350 points while the 10yr note and mortgage prices have barely moved in the past three weeks.   Under this there is something that keeps interest rates not able to increase while stocks are improving.  The Fed is touting a stronger 2014 economy.  The Fed says tapering will continue and that it will begin to talk more about increasing rates.  Generally speaking, that mix of underlying fundamentals should be pushing interest rates higher.  Not happening!  There is something other than these things that is keeping the 10yr note in a narrow 5 basis point range and MBS prices tethered to a 45bp price range. Yes, there is no inflation now to be concerned about, and no safety moves due to global issues or domestic concerns - but that still doesn’t square with what would be normally expected under the present circumstances. There is one positive take away from this kind of market - it clearly provides evidence of what we preach a lot.  Do not rely on fundamentals over technicals.  Price action is where the primary focus has to be for those that trade in short term time frames.

As I mentioned this morning, a lot of attention has been brought on by the debate over the weather. Some market participants feel the uncommonly harsh winter justifies some softness in recent economic data while others say that is overblown. As such, trading levels are 'sitting tight,' until the debate is more adequately resolved.

In summary, today seemed like a holiday; there was no news worth discussing.  Not much to add to what we have been saying for what seems like ever.  The long end of the treasury yield curve has not moved for weeks with MBS prices about the same. The technical indicators we use all neutral now, suggesting markets are in complete equilibrium, something not seen often in the rate markets since 2008.  I am of the opinion that there is just too much to lose by floating. Rates spike much faster than they decline. Get caught floating at the wrong time and you're asking for pain. I always suggest locking once I discuss an application with a client. If floating you just go along for the ride. This includes the stomach turning climbs in rate.

Remember, if you want to know the benefits of locking your rate today versus floating, simply give me a call at 314-744-7806 or visit me on my website at www.CallTheMoneyMan.com.   I have access to real time Wall St. data and instant market alerts with breaking news that I monitor throughout the day to assist us on making the informed decision.