Mortgage Rates Leaning Higher

Mortgage rates leaned a bit higher again even though the Mortgage Backed Securities (MBS) and Treasury Bonds were relatively quiet.  The most prevalently quoted conforming 30yr fixed rate for best-case scenarios is still hovering at 4.5%. 

Existing home sales was the main focus today and the report was not much as what was to be expected.  We noted some reviews called the housing sector still very good, that may be the case when seen from the crash levels but compared to the last 40 years sales are well off the norms. The lack of inventory being blamed for the slowdown; would be sellers have little incentive to sell in most of the country, the penchant for upgrading has waned for the past five years and will likely to continue. First time would be buyers are increasingly turning away from buying in favor of renting.

The afternoon Treasury auction was weaker than anticipated, but again, not much was noted in the markets that affect mortgage rates.  Tomorrow we get some further reports in regards to mortgage applications (hopefully weather will not be the blame this time if they are down) and the 5yr treasury notes - at the belly of the curve and the most volatile note recently, the demand will carry a little more interest, it isn't in the wheel house of MBSs but is still used by some savvy hedgers to hedge mortgage pipelines.

In determining your personal approach to the mortgage rate environment so far this year has been like riding a roller coaster.  Sometimes there are too many twist and turns that make you feel a bit wheezy, and other times are when this ride will ever get going in one direction or another.  We have seen a tight range between 4.375-4.500%, but there have been times where we touch 4.25% as well as the other side of 4.625%.   In general, spending any amount of time at those extremes has made it increasingly likely that a move in the other direction is coming. 

So what am I suggesting?  Pigs Get Fat and Hogs Get Slaughtered?  We are in a sideways pattern for nearly four plus months, and I agree there is still a downturn out there in the stock market that will bring these rates lower before they finally shoot up for good, so I would float cautiously unless you are ready to close in the next two week.

In summary, not much going on with rates as they are holding steady in a very tight range. With auction supply hitting today, it is common to see rates worsen slightly, but once the supply is out of the way it is also common to see rates rally. If you have been floating, I think floating through the auction cycle could pay off, but be prepared to see some losses before the gains. As always, nothing wrong with locking if you are happy with the current terms being offered.