Mortgage Rates Gave Back Some Gains from Yesterday
Mortgage rates moved higher over the course of the
day today as financial markets underwent a correction following yesterday's big
move lower in rates. Some banks did not
want to release all of its gains and were glad they did such as the market gave
some back later this afternoon.
Naturally, the burning question at the moment has to
do with the permanence of yesterday's strength. Which moves are real and which
moves are corrections? While a case can
be made to suit any level of optimism or pessimism, you would have to be
extremely pessimistic about the rate outlook to consider this afternoon's
trading levels to suggest anything other than solid progress in the battle
against February's weakness. In other
words, if you look at where we were in the first week of March, and even where
we were on Tuesday, today looks great in the bigger picture. In fact, there was a reason why I stated this
morning to “Lock and Load”. Everything
is done on computers these days, but this expression is given out to everyone
as it was the old way to get the rate sheet wrote up and loaded into the fax –
and hoped that the fax on the other line was not clogged up with everyone doing
the same thing.
Bottom line, it's too soon to rule out that trends
bounced back in our favor so far this month
European markets certainly hint at that, and European markets have been
a key consideration recently. In terms
of the lock/float stance, this means that if you were already inclined to float
and understand the risks, then you're not crazy for doing so. But the increased volatility in general means
that you can never assume the rates you are looking at right now will be
available a few hours from now, which of course, favors a lock bias.
In summary, March Madness came a day early yesterday
in the form of the culmination of the 2 day Federal Reserve meeting and Janet
Yellen's and the Board's dovish remarks and statement. And the Madness was
excellent for rates. Best levels in weeks. We have given some of that back but
it was to be expected after such a big move yesterday. I think we are in good
shape right now. Once the dust settles, we should be able to evaluate the
trends direction even better. With today's
damage, we are still better than where we started yesterday. This morning I suggested locking, but now I
am recommending with the give back to cautiously float and let’s see what
happens.
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