Are We About to See 3.5%?

Mortgage rates surprisingly are moving lower than ever imagine as we might see 3.5% depending on the scenario and fees associated with such very soon.

If you were not watching closely this afternoon you missed some of that volatility we have been talking about this month. About 2:00 crude oil unexpectedly shot up over $3.00, no warning and no follow-through in after hours trading but the stock market spiked higher and interest rates increased and MBS prices declined. The entire event lasted about 30 minutes before stocks retreated, MBS prices rallied back and the 10yr yield retreated. Not what we would define as major but enough to make me sit up straight for a minute. I mention it because although it was just burp, it demonstrates just how nervous markets are these days - stocks, bonds oil and all commodities. I wonder if this defines the bumps that soon could come our way.  Was this a warning?  Markets are jittery with yields this low, the Fed talking about increasing rates and crude well overdue for some big correction. When? Not able to predict that - but I will be on top of it when/if it occurs.

Who knows how this will play out over the next couple of days/weeks/months? The best advice I can muster is, do not get caught up with the details. For all of the chatter from heavy weight economists, politicians and myself - no one has played in this game - it is a new one with rules still being developed. Best that can be said - it is what it is, and we have to work within the framework that exists. The world is deflating—period. How that will mesh over time no one knows even if they or we believe they do. That sums why markets this year are going to be volatile, much like we have experienced already in 2015.

In summary, in terms of how to approach this rate environment, the comment that seems to come out is “wow “.  Time and time again since late December, any move toward higher rates has proved fleeting.  Will it end soon?  One common strategy for those that want to keep floating in the hopes of further gains would be to set a limit at slightly higher rates than today's quote and keep floating until that limit is reached.  For instance, if you're being quoted 3.5% today, you could plan to lock if your rate rose to 3.625%.  It's the same concept as a "stop-loss" employed by investors.  Whatever you do, be sure to coordinate on your strategy with your loan consultant. 

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.