Mortgage Rates Unchanged

Mortgage rates were unchanged today after some volatility the past two days.  Rate markets continue to move in narrow ranges as we saw today the 10yr and Mortgage Backed Securities (MBS) were lower in price driven by better news from China and a slightly weaker ISM manufacturing on the headline, but the interior components were better than expected this morning.  Nothing can be read into it as rate markets can be defined as stationery.  We have not seen much movement now in the mortgage rates for nearly three months.  The last instance of meaningfully higher rates was in early January. Today's most prevalently quoted conforming 30yr rate for top-tier scenarios is now pushing the 4.625% mark with a narrow possibility of 4.5%.

The last time rates were this flat for this long was in 2009.  Conventional wisdom in financial markets holds that such narrowness or consolidation often precedes a large, fast-paced move in either direction.  Indeed, this does tend to be the case more often than not, but from a fundamental standpoint, there are valid challenges this time.  Specifically, there are compelling barriers against a move significantly lower in rates but also a questionable ability of the fragile economic recovery to sustain significantly higher rates.  If  volatility is on the horizon, it may be short-lived, but most likely to be seen in the next three days leading up Friday's Employment Situation Report.

 In summary, tomorrow we get the first peek at job creation with the release of the ADP payrolls report and of course on Friday we get the official government report.  It is highly risky to float through these reports.  If you feel the data will show less jobs created then estimated, rates will rally. But, if they show more jobs created then expected, rates will get worse. So floating could pay off, but it could also cost you...float at your own risk…. Or should I say it again, Pigs Get Fat, and Hogs Get Slaughtered.