Mortgage Rates Bounced Back to Thursday's Levels

Mortgage rates bounced back to Thursday’s levels after hitting their lowest levels in over two months.  The most prevalently-quoted conforming 30yr fixed rate for top tier scenarios remains 4.125% - 4.25%.  The prospects for widespread availability of 4.0% died down with today's move, but we are still as close to that as we have been since late May.

The bond and MBS markets remain bullish from a technical perspective, trading below the key averages (10yr) and above key price levels on MBSs. We noted Friday that while the outlook still has a positive outlook, the 10yr note hit a momentum level on the 14 day relative strength index that in the past has caused a momentary end to all rallies in the last year. From a fundamental perspective, Ukraine/Russia is not over - Putin will not make any substantial deal to end the civil war in Ukraine with Russian separatists functioning as surrogates for Russian troops - his approval rating within Russia before the Ukraine and Crimea excursions was around 50 - now his approval rate is at 80%. With Russian citizens in effect sanctioning his actions he isn’t going to pack up and go home.

If you have the stomach to absorb further increases in rates, floating isn't out of the question as we're still near the lower side of a longer-term trend leading lower. Just realize that if rates continue high enough to break that trend, you could be forced to lock at a loss. For shorter term scenarios or longer term scenarios that are happy with current rates, it's also a good idea to lock near long-term lows if the opportunity presents itself, and today's rates are still among the best of the year.

In summary, mortgage bonds traded down today as the equity market rallied. We were at the top end of the range for mortgage bonds so pull back is somewhat expected. How long the pullback will last is the million dollar question. To protect yourself especially if you are closing in the coming week or two locking today makes a lot of sense.

Keep a strong look at the markets and continue to cautiously float if you do want to take a risk. Remember, if you want to know the benefits of locking your rate today versus floating, simply give me a call at 314-744-7806 or visit me on my website at www.CallTheMoneyMan.com. I have access to real time Wall St. data and instant market alerts with breaking news that I monitor throughout the day to assist us on making the informed decision.