Mortgage Rates a Little Better with Volatility Ahead

Mortgage rates started the day heading higher after overnight news of a potential ceasefire in Ukraine caused investors to quickly sell safe-haven assets.  The Mortgage Backed Securities (MBS) that dictate mortgage rates fall into this 'safe-haven' category along with US Treasuries.  When investors are selling MBS, prices move lower and rates move higher. As the day progressed, however, financial markets steadily backed away from the overnight momentum.  Stocks weakened and bond market improved.  4.125% still remains the most prevalently-quoted conforming 30yr fixed rate for top tier scenarios. 

Two points about the rally in treasuries today -  traders do not believe that a real cease fire in Ukraine will happen, and technically selling dried up at the key 2.45% level. Putin called for an end to the rebels’ offensive in the country’s easternmost regions and urged the withdrawal of the Ukrainian military from residential areas as part of a seven-point proposal he presented today. A final agreement may be reached at a Sept. 5 meeting, he said.

The recent spurt of better than expected economic reports is increasing the idea the Fed will begin increasing interest rates sooner than expected, as we have noted, it is a moving target subject to the last data point. With the potential of higher FF rates the stock market may find additional rallies difficult to achieve. Friday’ employment report and Ukraine are the drivers now. 

In summary, if you must lock this week, I would lock and look to avoid the swings we are likely to see the next few days with new data releases. Get off the ride, if you cannot and or do not want to risk what is likely some worsening in rates throughout this week.

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.