Mortgage Rates Did Not Move Much Today

Mortgage rates did not move much to start the week.  The most prevalently quoted conforming 30yr fixed rate remains at 4.25% for flawless scenarios with 4.125% available to a lesser extent and 4.375% being quoted more such. 

Treasuries and MBSs traded quietly but weaker all day.  The stock market opened this morning with some weakness, then declined taking the DJIA down over 65 points before improving this afternoon to close with not a lot of change. As noted this morning, there is a lot of key data with the FOMC meeting. Until the policy statement on Wednesday we don’t expect any changes of consequence.

Tomorrow there is not much as most of the data will not occur until Wednesday and through the rest of the week. Still a constant discussion and debate about the actual, real, economic picture and outlook, still markets shuffling back and forth about when the Fed may begin increasing rates, still huge debates about the quality of the job growth -better on the headlines but not so good when we focus on the wages being paid for most the jobs. Still Janet Yellen rallying the troops saying the economy is improving and the employment rate is improving while always tossing in the caveat that the Fed will react to incoming data. In other words there is little consensus, leading to markets being cemented in the recent ranges----interest rates and stocks, and trading volume remains thin. Yellen is trying to determine how best to tighten monetary policy without upending the economy beset by slack in the labor market,    

Eight days and counting, the 10yr note restrained in a five basis point yield range, from 2.50% to 2.45% with very strong resistance at 2.44%. MBSs following along like the loyalist pet ever, in its own range. Are we over it yet? For years many that were focused on advice and commentary to mortgage lenders and loan officers tried to make a feeble case that MBSs are not treasuries and should be the prime focus when looking at rate forecasts, for years we battled that view and now finally it is hard sell to attempt to divert focus solely to MBSs. Technically the 10yr is still holding slight bullish biases - and we mean slightly. A close over 2.55% will turn everything bearish, the support level is declining every day so as time moves on that support will level will decline. On the better side, if 2.44% is achieved on a close then another leg lower in rates can be expected.

In summary, after a fairly contained range for rates this year, this week’s data could be the catalyst that pushes rates one way or the other. Hopefully that direction is down to increase affordability and potentially kicks off a refinance mini-boom. If rates move up sharply, the housing market could see more pressure and contraction. Locking is the safe play for sure and my advice to my clients is there is much more to risk than to gain by floating.

• 15 YEAR FIXED - 3.5%
• 5 YEAR ARMS - 3.25% - 3.75%