Mortgage Rates at Their Highest Levels in Over a Month

Mortgage rates unfortunately moved in the wrong direction today as they raced to their highest levels in over a month.  Even though 4.125% is still available for conforming 30yr fixed rate mortgage for flawless borrowers, we are now seeing 4.25% be more prevalent after today’s weakness. 

We have talked of market volatility in the last few commentaries; today however, in the bond and mortgage markets there was little or no price volatility. The 10yr opened at 2.52% very early (actually overnight) then declined to 2.50% and spent the entire session sitting quietly. MBS prices were doown15 bps at the open and remained such through the day. 

One week from now the FOMC will begin its two day FOMC meeting with next Wednesday the policy statement. As the clock ticks down the discussions will increase about how the FOMC will frame its policy statement; will the Fed change the language from essentially a time frame out look as they have until now? Saying rate increases will not occur for an extended period of time; or will they be more specific using data as a trigger point? No answers, just a lot of opinions from economists, analysts, pundits and traders. For the next five sessions that is all we will hear, but in the end traders and markets will not likely be able to form any solid consensus. The August job growth has been ditched as an anomaly with most expecting the weak job growth to be revised higher.

 

Technicals in the treasury markets are bearish for the time being, we don’t argue against the move higher. It would be nice to see rates decline but wishing is not the way to handle a market. Take it as it is, bearish. The first support now is the 100 day average at 2.53%, today the high was 2.52% about 5:00 am this morning. MBSs also now pushing the price below the 20 day average on the FNMA 3.5 coupon. 

In summary, short term closings should always consider locking, but if you have some time I think floating might pay off. We have new supply of treasury debt coming to market this week and it is pretty common for rates to rise ahead of this new supply. It is also common for rates to rally once the new supply is absorbed by the markets. We also still have quite a bit of geopolitical risk that could benefit rates. Europe postponed new sanctions against Russia for a few days yesterday, and these sanctions have more teeth to them than the prior ones as they target Russia's energy sector. If these sanctions go into effect, you can bet Russia will respond with sanctions of their own. 

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.