Mortgage Rates Held Steady
Mortgage
rates held steady for the most part of the day even with stronger market
conditions that could have moved them to a better side than yesterday. The most prevalently-quoted conforming 30yr
fixed rate for top tier scenarios was pushed solid to 4.125%, but depending
on various fees 4.00% can still can be done.
A
nice day today in an otherwise narrow trading range in bonds and MBSs. Not much but anything is welcome. Interest
rates, as noted this morning have been well contained the last three weeks
while pundits continue to forecast interest rates are going higher between now
and the end of the year. We believe that outlook is tainted - it is based
primarily on the global economy gaining strength and inflation increasingly
creeping higher. Some Fed officials, all economists but Richard Fisher at the
Dallas Fed (he is a business man), are anticipating the beginning of inflation
soon. That is another belief we don’t hold.
Looking
at, and listening to, the stock market analysts it is onward and upward - the
bets being laid that wages are about to increase and consumers are about to
unleash massive increases in spending that will propel economic growth over the
next 12 months. Inflation isn’t going to explode; maybe a little increase but
the US and global economies are sitting on stimulus frm all central banks
printing presses over-heating on all the QEs. The Fed’s balance sheet a few
years ago was less than a trillion dollars and had been low for years; now at
$4.3 trillion and the economy is still slow. Consumers account for 70% of
economic growth; we do not believe consumers have the spending power (even with
lower gas prices) nor the enthusiasm to spend as is presently believed by most
analysts and about all economists. We note periodically that on The Street and
in the world of forecasting, the safest place to be is with the majority, I
find it very difficult to accept that all those rosy forecasts that will lead
to higher interest rates are as solid as they are advocated.
In
summary, now that auctions are behind us, it turns out we've started to see a
bit of a "relief rally" where treasury and mortgage buyers arise
after so much supply has moved through the system. At this point, while MBS
have rallied a little, I've seen little to none of it passed along to rate
sheets and consumers. For that reason, I'd float at least into Friday to see if
the rally continues and the gains are passed along.
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.
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