Mortgage Rates Have Gone Even Lower

Mortgage rates have gone even lower than a lot of us thought would never happen again.  The rates today are back to the day of May 22, 2013 before the Feds decided to reduce it asset purchases the next day, of which we saw one of the biggest jump in interest rates in mortgage rate history.  The most prevalently quoted conforming 30yr fixed rates for top tier borrowers was at 3.875%, but 3.75% was making some sense depending on the fees associated with the program.

Volatility marks today ahead of the FOMC policy statement tomorrow afternoon.  Stock market trading set the tone for the bond and mortgage markets.  The indexes opened soft as it was up, then down, back up, and then ending downward.  The Mortgage Backed Securities (MBS) was even more volatile, even more so than the treasuries.

The day can be defined as setting up for the FOMC tomorrow.  Last week and prior to that, the over-whelming market view was that the Fed would change wording in the statement to indicate interest rates would be increasing about mid-2015.  Over the last few sessions, there has been some back-peddling in markets that with deflation spreading quickly around the world on collapsing oil and commodity prices that the Fed has little reason to think about increasing the FF rate anytime next year.

Not sure what the FOMC will do – or how the phrasing will come out and how the markets will react.  The stock markets is vulnerable right now but from most are seeing, there is still a strong underlying support there.  The long end of the yield curve including mortgage markets is in better condition that he short and middle of the curve.  What emerges from the meeting and Janet Yellen’s press conference will likely continue the recent high level of volatility.  Tomorrow morning’s November CPI reading will probably not be much of a factor with prices falling everywhere.

In summary, global problems are creating a flight to safety where investors sell stock for the safety of US treasuries. The global issues will not be solved any time soon, which should support mortgage rates preventing them from rising significantly.  With everything that is going on, I am still recommending locking short term and cautiously float if you can withstand the 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 my website at www.CallTheMoneyMan.com. I have access to real time Wall Street data and instant market alerts with breaking news that I monitor throughout the day to assist us on making the informed decision.