Mortgage Rates Hit a Bump in the Road

Mortgage rates hit a bump in the road today after slowly moving downward during the past week. Either this is a precursor to a small correction, or an early warning sign that rates are about to increase even further. The most prevalently-quoted conforming 30yr fixed rate for top tier scenarios remains at 4.25%, with the closing costs associated with this still being the only change.

Always looking for some pattern in search of the trading gods; we have found the golden goose. Any time the key stock indexes have two down days, buy calls in bundles to fill your retirement accounts. Yesterday and Monday the DJIA and the other indexes fell hard; at the end of the day yesterday there was increased chatter around the floor that this was it, a big correction was about to begin. It wasn't a new round of fear, it had been repeated numerous times in the last four months. The DJIA, NASDAQ and S&Ps rallied nicely today after falling early in the week. No outstanding news, just nowhere else to go looking for a way to generate a profit. Low FF rates and global rates are the rock walls that stop any idea of bailing on stocks these days.

The result of the strong equity market lined up nicely with the 10yr testing its strong resistance at 2.53%; it of course failed and rates notched up a little this afternoon and MBS prices followed lower. No direct news, new home sales were very strong this morning, up 18.0% frm July with estimates of a 4.2% increase. The housing bulls came out of the shadows reprising that the housing sector is strong. How they get to that is puzzling, but not worth my attention; the overall data is all we need to assess the sector.

In summary, we lost ground today after three days of rate improvements. The move wasn't huge, and may have been prompted by a poor 5 year treasury auction and stock gains, but could also indicate a longer term sentiment shift. The decision to float or lock is a bit tricky today. If you are a risk taker you may benefit from floating for it is still possible for rates to improve. If you are nearing your closing date and do not want to take any chances locking is a very smart move. If you choose to float keep a close eye on the market.

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.