Mortgage Rates Loose Ground Today

Mortgage rates shot rapidly out of the gate today after the GDP was announced at 7:30 this morning, and never looked back.  For weeks, we've discussed the prospects for increased volatility centered on today's economic calendar. The chances of a bigger move were much higher going into today's GDP data, and a bigger move is exactly what we got. Unfortunately, it was in an unfriendly direction. GDP was significantly stronger than expected, which caused an equally significant amount of weakness in the secondary mortgage market.  On average the most prevalently-quoted conforming 30yr rate for flawless scenarios moved up to 4.25% - 4.375% from 4.125%.

So if we lost this much ground today, what should you do?

First of all, in the grand scheme of things, today's losses were not that horrible. Granted, they may seem very horrible to you if you were considering locking yesterday and held off, but ultimately, the worst-case scenario is that your quoted rate will be an eighth of a point higher today. Some borrowers will merely see the increase in the form of higher closing costs.

The week still has a lot of news to digest.  Tomorrow weekly jobless claims are expected up 21K to 305K continuing the volatility that occurs this time each year on the auto maker’s rollover to new models, last week claims were down 19K. Q2 prelim employment cost index is expected up in Q1. The July Chicago purchasing managers’ index expected higher than what was in June. Friday is employment day, all the talk and analysis today will dissipate once the employment report hits; also on Friday June personal income and spending, June construction spending, the July national ISM manufacturing index and the U. of Michigan consumer sentiment index.

In summary, we knew this week would be volatile for rates, and today certainly confirmed that. Both second quarter GDP and the Fed statement indicated a growing economy, which led to numerous negative re-prices. Rates are still within this year's range, the question is whether Friday's jobs report will push out of it. Hard to recommend floating to anyone now unless they're a LONG time away from closing and have hardy risk tolerance.