Mortgage Rates Headed North

Mortgage rates moved went Northward today on a combination of factors including strong economic data, developments in Ukraine, and prevailing market momentum. It was not a good day, the 10yr finally gave up unable to break 2.60% for the fourth time since last February.  Three things broke the narrow trading -  the very strong Philly Fed index, news that there may be some cooling in the Russia/Ukraine situation,  and the three day weekend.

As such, today's sharpest move in bond markets which include the Mortgage Backed Securities (MBS) that dictate lenders' rates came after Ukraine headlines suggesting solid steps toward de-escalation of military involvement.  Momentum was already slipping into negative territory after stronger economic data this morning.  When economic reports are better than expected, bond markets tend to weaken, which pushes rates higher, all things being equal.

The net effect was a move back to 4.5% for most lenders as the most prevalently quoted conforming 30yr fixed rate for best-case scenarios.   Bond markets are closed tomorrow. 

In summary, economic data here continues to indicate an improving economy which is bad for mortgage rates.  At the same time, it appears tensions are easing in Ukraine, also bad for mortgage rates.  With the bond market closed tomorrow, pricing has been protected – probably in light of the Ukraine situation.  Rates worsen on the last day before a long weekend which is nothing new. Right now the best bet is to see what happens Monday to calculate which way to go.