Mortgage Rates Drifting Lower

Mortgage rates drifted lower today the most prevalently-quoted conforming 30yr fixed rate for top tier scenarios now stands again somewhere between 3.875% and 4.0% depending on various fees, but now pushing the higher side.  

A little choppy, but the bond and MBS Markets settled down into a quiet trade by the end of the day.  There were no economic reports today, but we do have September existing home sales out tomorrow.  Home sales are thought to be up 1% to 5.10 million.  Still very slow compared to historical recoveries.  This time housing has not led the recovery, this time it has been auto sales most of all. Consumers are not spending - no raises on the horizon and concern that job security remains. Prices are not increasing, so far not declining but as we move more each day toward the Holiday shopping season how consumers spend will be a hot topic. Reports from firms that are supposed to have a handle on it are more positive than last year. I wish I could be more optimistic about the health of the consumer (by definition the majority of folks), however recent data is not very optimistic. Many believe the lower energy prices, low interest rates and better jobs will lead to very strong buying between now and the end of the year; we sincerely hope that proves correct but we are not jumping on that bandwagon yet.

The 10yr is finding support at 2.20% - it is still a follower though, going only where the equity markets take it. One take away though, we can be fairly sure that US and global interest rates are not going to increase much now. Those old forecasts of 3.00% on the 10 by the end of the year are dead. How much lower rates will go is where the debate will continue. We expect continued interday and intraday volatility led by stock trading. Next week the FOMC meeting should keep markets somewhat in check through this week.

In summary, rates could easily move higher or lower from our current location and there is no specific guidance to give us a strong indicator which direction is next. Locking secures some of the best pricing we've seen in the last 18 months, while floating risks losing it in hopes of the best rates in 2 years. To me, locking is the smartest decision as securing the lowest rates in a year and a half seems like a smart move.

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.