Mortgage Rates Steady

Mortgage rates held steady today as investors went towards safety of bond markets in response to geopolitical tensions in Ukraine. The Mortgage Backed Securities (MBS) that most directly affect mortgage rates typically benefit when demand is high for safe-haven assets like US Treasuries. The most prevalently quoted conforming 30yr Fixed rate for the best-qualified borrowers is currently in the process of moving from 4.375% to 4.25%.

While there was economic data today that normally elicits a response in bond markets, Ukraine-related headlines set the tone instead.  Obviously markets are in very uncertain mode now and will likely be that way through the week.  There is no certainty now about what will eventually take place; what is sure is that the Russian/Ukrainian crisis is not going to go away soon. What is also clear is that markets will eventually adjust to it and discount it within market values and levels of interest rates (think the Syrian crisis).  The only way to ride this out is to focus on how the markets react, regardless of the media or any reports out of the region. The 10yr note is still technically bullish, we will trade it that way until the market changes. The upside risk on the 10yr yield is at 2.75%, 15 basis points from here. A wide range also applies to mortgage rates. We fully expect an increase in market volatility through the rest of the week. Lots of key economic data that may pull against the fear factors that are dominating today.  

Between now and then, it's not a mistake to hold off on locking in the hope that rates could continue to fall as long as you understand why they're falling and how quickly it could change. No one knows when the situation in Ukraine will begin to improve, but once it does, it will make for compelling upward pressure on rates equal to the amount of compelling downward pressure seen last week and today.

In summary, do you know how quickly the turbulence in Ukraine will be resolved?  Me neither, but it is certainly benefiting interest rates at this time. At this point, it looks to be giving enough cover to prevent rates from rising into NFP...so day to day...be careful floating.