Mortgage Rates Holding at Four Percent

Mortgage rates are holding around as the most prevalently-quoted conforming 30yr fixed rate for top tier scenarios still stands again around 4.0% depending on various fees, and it is still interesting if it is cost effective to go lower with the rate depending on the fees to do such.  

There was very little movement today – at least there was not much news for the market to digest.  September pending home sales this morning was weaker than anticipated, but the market did not react much to this data.  Little information will be forthcoming tomorrow as Durable Goods will be the key indicators given out at 7:30am.

Not a surprise that the ECB kind of fumbled the ball again over the weekend as it was to provide the public with reliable data about the finances of the continent’s lenders.  After the Bank posted the results, they were quickly removed as there were too many errors in the data.  From Italy to Poland, their balance sheets were left out of the tests and hence the errors.

The biggest news of the day still is the declining price of crude oil.  The price fell below $80.00 today, but closed above such and still remains at the lowest point since June 2012. 

Beside the FOMC meeting on Wednesday, we have the advance Q3 GDP on Thursday – the first of three reports between now and December.  The advance report usually is revised when the preliminary report hits (next month), the advance report lacks some of the key data to get a more accurate reading.

We continue to like the bond market; only because the markets like it based on price action that remains bullish. That said the bullish sentiment has waned somewhat in the week, softening the strong technical bias. The risk now is 2.30% for the 10yr (2.26% now), a close over that level will damage a lot of our work and point to a move to 2.36% - if that were to give way, then all the way to 2.40%. The risk in terms of MBS prices in floating now is 70 basis points if the 10yr were to climb to 2.36%.

In summary, rates continue to trade sideways.  Floating into the Fed statement makes the most sense. If rates are able to improve ahead of it, you can take advantage of the better pricing should the market reverse upon release of the statement. Should bonds advance after the statement you will be able to continue to float and wait for better pricing.

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.