Mortgage Rates Stopped Their Trek Upwards

Mortgage rates stopped their trek upward and retreated just a little bit today.  This still leaves 4.125% - 4.25% (depending on loan fees) intact as the most prevalently-quoted conforming 30yr fixed rate for top tier borrowers.  

Another low volume improvement in the stock market and interest rates have held support on the 10yr at 2.44%, now 2.41%.  MBS prices ending the day better than morning pricing levels. The data this morning for the US was better than expected. 

Is the housing sector improving? We certainly hope so and the data this week does look better. Nevertheless the sector is still struggling and will likely continue until wages improve, and as long as interest rates don’t add to the unaffordability that as dragged the industry down. There is also changing demographics that do not get as much attention as it should. The market for first time buyers has diminished and it isn’t all because of affordability.  Young people today are not as enthused about homeownership as were young people 20 years ago and beyond. The life styles today don’t focus on owning a home - marrying late and having children later in life push the first time buyer back 10 yrs. No first time buyers equates to less sales of existing home sales for the move-up sector.

As you know, the Jackson Hole symposium gets underway this evening.  Tomorrow Yellen and Draghi will make very critical speeches sending messages about what the central banks are thinking and attempting to lead markets toward the path of higher rates.  What will the message be from the Fed tomorrow? Likely something for everyone as the Fed is expert in doing.  If the interpretation from Yellen’s speech tomorrow is a rate hike will be sooner than expected, the 10yr note rate will increase. Possibly slowly, but any decline in prices or increase in the 10yr rate will turn the market bearish and traders and technicians will seize on it. So far still slightly bullish and holding key support at 2.44%. We elected to say flat through the day, MBS prices did improve from initial; pricing but not enough to take advantage as lenders did not re-price better.

In summary, a nice bounce back today despite some economic data which was pretty good on the surface, but questionable in the details. We have no economic reports tomorrow that can move the markets, but Fed Chairperson Janet Yellen is set to make a speech at the Jackson Hole Conference at 9am which can definitely move the markets. With MBS well into positive territory on the day, floating overnight is worth the risk. But be ready to lock early tomorrow in case Yellen is bullish, but I think she will continue to be a bear and rates react positively to her speech.

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.