Mortgage Rates Steady

Mortgage rates did hold steady today.  With Europe temporarily out of focus in the short run, markets are looking for something to work from. There are hardly any US data points this week, existing and new home sales are about it. It is not over with Greece, in fact we could say the tough part is just about to begin - hard to picture that though after the turmoil over the last two months.

Traders looking toward the Fed rate increase after Yellen’s comments in her two congressional testimonies last week. Short term rates are inching higher with the renewed belief the Fed will gradually begin increasing the FF rate this fall. Talk around the trading floor today, that belief has increased on an increase this year, the timing however remains suspect but it is not important whether it is September, October or December, prices will already have adjusted to the increase.

Commodity prices are crumbling - gold on a five year low and most other commodities back to 2012 levels. As the dollar strengthens and the Fed poised to increase investors are cutting commodity investments. One plus is that will keep any inflation fears at bay, but also will concern the Fed that inflation will take longer to meet its 2.0% target.

Tomorrow is the 5th anniversary of the Dodd/Frank legislation. The idea was to make sure there was never going to be a too big to fail financial crisis - setting up 1000s of rules that still today are being tweaked and many still not enacted. Certainly the housing crisis led the way over the years but the regulators were sleeping while the crisis bubbled over beginning in 2006 - So Dodd/Frank gave regulators more power?

Because of Dodd-Frank, financial markets will have less capacity to deal with shocks and are more likely to seize up in a panic. Many economists believe this could be the source of the next financial crisis. The list of Dodd/Frank failures is long - simply stated Federal regulators and congress now control most of what lenders can do.

No data tomorrow and do not expect anything significant from Europe. Mortgage rates are likely to sit well in a narrow range now with not much change in mortgage rates. That has essentially been the case now since the beginning of June.

Looking ahead, expect consumer confidence to increase and economic bulls rev up with the decline in crude oil recently; more spending money should help consumers a little. Iran will likely begin exporting oil more rapidly than many have expected.

In summary, bonds were sedate today, as we drifted towards slightly higher rates in light trading. It's not unusual to see this in the summer, particularly on days when both economic data and global drama are absent. I am still in a "rather lock than not" mode for most borrowers. It is going to take serious motivation for rates to significantly improve, and I'm not sure where that's going to come from, at least for the moment.