Mortgage Rates Hold Steady Ahead of Holiday Weekend

Mortgage rates were basically the same as they were yesterday as there was very little movement ahead of a three day weekend.  The most prevalently-quoted conforming 30yr fixed rate for top tier scenarios remains at 4.125%,  with the closing costs associated with this being the only change. 

Most attention today on the increased terrorist threat issued by the UK this morning to “severe”, the second highest threat level they have. We continue to warn that what is happening in the Mid-East is much more serious than Ukraine/Russia. Not in the very near term, but in the wider perspective the entire Mid-East is beginning to boil and the US and our allies have no plan on what to do.

Stock investors still bullish, as well as bond investors still bullish - one of them has to give way. Much depends on the safe haven trade that is driving foreign investors to the higher and safer rates into the US Treasury markets.  Next week when markets return on Tuesday the trading volume should begin to increase - more volume will provide a better insight into what investors are thinking. Most bulls continue to talk about a correction coming in the stock market but as long as that dominates, the correction is likely to push back.

The bond market looks technically stronger than stock indexes, but neither is aggressively strong. We expect the 10yr to test 2.30%, the intraday low on 8/15 (2.35% currently). Next week we expect increased volatility in both stock and bond markets. Ukraine/Russia is becoming more entrenched, Putin is set on his plan and not likely to be dissuaded by sanctions or tough talk from the US or Europe. It is difficult to create a theoretical situation that could change Putin’s plans whatever in the end they are. He doesn’t give a damn about Russia’s economy slowing - he has the Russian citizens’ total confidence. The West cannot escalate the situation into a war; the situation will continue until Putin wants to call a stop to it. Germany is beginning to talk tough after trying to find a way out for Russia. Chancellor Angela Merkel said yesterday that the 28 EU leaders meeting in Brussels tomorrow will consider further sanctions on Russia.

In summary, we are bordering on the best rates of the year, but I say float through the 3 day weekend and into Tuesday. As I think better rates are just ahead, as the pull lower due to global events, European debt, etc is the largest rate indicator right now. Be ready to lock at any time, but I suggest waiting to see what next week brings.

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.