Mortgage Rates Has Little Movement as Volatility Continues

Mortgage rates essentially did not move much today as the volatility in the market is thick enough that one could sense the anxiety in the air – and I am not talking about the 1-3 feet of snow that is attacking the Northeast.  Apart from the overnight drama in Europe, there was not much going on domestically today.  The net effect was an increased prevalence of 3.75% among conforming 30yr fixed rate quotes for top tier scenarios.   3.625% is still out there, but there are fees with this that needs to be beneficial for those who want it.

We did see a slight increase in our 10yr note as it closed at 1.83%.  Tomorrow the FOMC will begin its 2 day meeting, concluding Wednesday afternoon with the usual policy statement. It is about what the FOMC thinks about increasing the FF rate now after declining economic forecasts from the IMF, World Bank and even the Fed. After the December meeting and into two weeks ago it was almost a given in the markets that the Fed would start what Yellen coined its lift off, increasing rates by mid-year.  Now as markets do, the waffling began last week that maybe the Fed would hold rates lower longer. Markets and media generally are very certain an event will occur - until the clock ticks down, then waffling sets in, investors hedging their ‘rock-solid’ forecasts.

Even with all the attention on the FOMC, we still have a number of key economic data as tomorrow we get December new home sales, Durable Goods Orders, and the Monthly Case/Shiller Index.  If that is not enough, we follow with the Conference Board’s Consumer Confidence Index later in the morning.  All this while the auction takes place on the 2yr notes by the Treasury.

In summary, treasuries and MBS still technically bullish, the first support for the 10yr continues to slip as it has moved from just above 2 to 1.94%.   We expect interest rates to continue to make new lows, however we do not discount that rates may increase in the near term, it has been a major decline in rates in a short time frame, and the price/time equation suggests the possibility that rates have declined to quickly.  Floating borrowers, as always, need to have a plan on when to lock when rates move, whether it is better or worse!

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.