Mortgage Rates Rides the Roller Coaster Again

Mortgage rates rode the roller coaster today after seeing big improvement from the negative economic news this morning, and then doing a complete flip back to equality by the end of the day. This seems to be the new norm as my stomach again went into knots on the reasons why this roller coaster headed north after the gains seen in the morning. The most prevalently quoted conforming 30yr fixed rates for top tier borrowers remained at 3.75% with no fees, but 3.625% was mix again with some fees quoted.

The story unfolding is about what we have believed - that the US economy is not as strong as most were (are) touting. November and December durable goods orders dropped substantially, jobs are poor in terms of a living wage yet all we are fed, at least for those that eat it, is all is good and 2015 will be better. The litany of weak data, the declining Europe economies, the slowing in China can only be swept away for so long before there is nowhere else to put the dust. Corporate earnings today signaled another example of what unfortunately we can expect this year. The economy will improve but the level of improvement is dangerously low in terms of growth ahead.

This is the way it goes - Q4 earnings are soft, as we have the unfolding data to prove it. The take away from Wall Street pundits forecast from the IMF, the Fed, the World Bank, from the individual country forecasts, all have been in an 18 month period of revisions weaker than the previous outlook.

I am not the Lone Ranger with the outlook that the Fed will not increase rates this year as others are now saying the same thing. With recent poor data points the crescendo is building that the Fed will not increase rates this year and not until mid-2016. The Yellen lift off has not gotten off the runway. Tomorrow’s policy statement will likely further confuse more of us, as I do not believe they will signal any delay in increasing rates but will inject the well-worn data dependent phrase -  translating, the markets will have to assess the increase on their own, the Fed will follow.

In summary, lower rates are more than likely ahead but the road is less traveled at these levels as it will be bumpy. With the FOMC tomorrow and MBS prices lower, the volatility is still excessive and subject to unexpected huge swings, just like today’s stock market. The 10yr hit 1.73% today but going out at 1.81%,

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.