Mortgage rates Improved a Tiny Bit Today

Mortgage rates improved a tiny bit today, but the rate itself has not changed per se unless you weigh in all the costs/points associated with what is being quoted.  The most prevalently quoted conforming 30yr fixed rate for best-case scenarios remains at 4.25% for a second day, with some borrowers seeing today's improvement in the form of lower closing costs if they wanted to move towards 4.125% than yesterday’s quotations.

The bond and mortgage markets improved this morning mainly due to the initial selling in the stock market, the DJIA opened flat, within 20 minutes the index was down 87 points ( on comments from James Bullard). From that point on the index slowly improved through the day and took a little momentum from the rate markets; they spent the remainder of the session about where they traded at 9:00 (the 10yr and MBS prices).

James Bullard, St. Louis Fed; predicted the central bank will raise interest rates starting in the first quarter of 2015, sooner than most of his colleagues think, as unemployment falls and inflation quickens. That shook the tree a little. In that context it is important to think that there is an increasing number of traders and investors that are worrying more that the stock market is overdue for a pullback.

Nothing new to grab traders’ attention out of the mid-east today.  Markets keeping an eye on the situation but recently there hasn’t been any direct market impact we can point to; still the pot boils. Crude oil jumped two weeks ago, since then oil prices have stabilized.

The only data tomorrow; at 8:55 the end of month U. of Michigan consumer sentiment index.   The US bond and mortgage markets are now technically bullish, do not overlook that. How much lower they can go is debatable but listening to the doom and gloomers that continue to tell us that interest rates are going higher is a mistake at the moment. Just as my comments that I expect a sizeable correction in the equity markets, and the indexes continue to resist any significant selling.  The 10yr has broken a short term key resistance when it move below 2.58% on a close yesterday and today the yield continued to decline. The key now is 2.58% on a close.  If it closes above it the bullish bias will lose our vote. Bull or bear market moves always start with trepidation. The bullish bias now will likely be a tough trade with volatility swinging the rate back and forth; hard to accept at these levels have a lot more to go.  But as we say, go with the flow and the current flow is better rates.

In summary, I believe that floating has paid off and now we are in a new range. If you've been holding off on locking a rate since last week, you have seen a good amount of improvement - enough to consider locking it in before next week's important jobs report on Thursday (a day early due to the 4th of July holiday).