Mortgage Rates Moved Lower Today

Mortgage rates moved significantly lower today. During the holidays, I kept on mentioning the roller coaster that we were on, as we kept having significant upswings as well as downturns – and then trying to second guess which way we were going to turn when there was a fork in the road.  Yesterday I commented on the steady plateau we have been on for the year, and have dropped ever so slightly in the past several weeks, that today’s events was rather impressive – bringing us to a new floor in nearly a year’s time.  The most prevalently quoted conforming 30yr fixed rate for best-case scenarios is now at 4.125% with 4.00% just around the corner.  However, the best rate is still 4.25% as there is some costs that might be associated with the lower rates.

Even though we expected some gains today, we got more than we bargained for.  We had a very light day with no major economic releases and a 5yr Treasury auction in the afternoon.  Tomorrow 1st QTR GDP, which has already been released will now have its first round of revisions to it.  Economists are expecting the small gain to be revised downward.  This is old data though and not likely to materially impact pricing unless it is a big surprise reading.  Initial Jobless Claims are expected to move lower from the prior reading of 326K down to 315K.  It will take a reading above 350K for MBS to be impacted though.  Pending Home Sales are expected to improve 1.6%, as we will need to see if our new lower rates for the past 30 days will help this number.  The 7yr Treasury Auction will be closely watched.  If it has the same type of heavy demand as the 5yr and 2yr year this week, then MBS may improve.

In summary, if you floated overnight, you should be thrilled today. Big rally in rates as the 10yr broke through resistance closing at 2.44%.  Anytime we get a big rally, it is hard to pass up the improvements. Without a doubt, if you are within 15 days of funding you should lock.  If you are a gambler, and your gut feels there is more rewards out there than what is on the table, the I would be careful floating.