Mortgage Rates at Four Month Highs

Mortgage rates moved higher today after the roller coaster continued its up and down pattern all day following the economic news in the morning.  We are still seeing 4.25% as the most prevalent quoted conforming 30yr rate for top tier borrowers with additional closing costs and 4.375% coming into the picture. 

The stock market continued its march higher this afternoon while the bond and mortgage markets sat reasonably quiet. The FOMC meeting over, after two weeks of discussions and debates the end yesterday left the Fed in the same position markets had thought before largely succumbing to the idea the Fed would announce specifics on when it will increase short rates. The focus on when the Fed will move has been a dominate influence for analysts for over a year now; at the end of it all the Fed is in the same mind-set it has been since the end of 2013. No rate increases in the foreseeable future, meaning mid-2015 as had been the suspicion until a couple of weeks ago. Now back to buying stocks and avoiding the bond market.

This morning August housing starts and permits were weaker than estimates.   Weekly jobless claims declined 36K last week, much lower than expected.

With the Fed out of the way and traders and investors satisfied interest rates will remain low it is onward and upward again for the equity markets; the only place to be looking for gains in investor portfolios. No safety needs for investors now; Ukraine has faded into the background. U.S. stocks rose for a third day, sending benchmark indexes to record levels again.

Interest rates increasing, with no inflation in sight should moderate the climb but to what levels we can’t intelligently assess at the moment. Our best guess is the 10yr will have support at 2.66%, but any decline in long term rates will not get rates back to those lows a few weeks ago unless there is a reason to run to the safety of US treasuries on geo-political issues or some other unknown and unforeseen events.

In summary, mortgage bonds are at a pivotal point. Should they fall a bit more it could bring a round of selling which will bring with it higher mortgage rates. However if they are able to reverse course and head higher we could see home loan rates drop from current levels or at least make locking in a good rate less costly. Risk vs reward leads me to recommend a floating stance heading into tomorrow.

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.