Mortgage Rates Quiet Today

Mortgage rates were generally quiet today as bond markets wound down ahead of the 3-day weekend.  While stock markets and many businesses will be open as usual on Monday, banks and bond markets will be closed.  This means that it is not uncommon to see movement in interest rates level-off heading into these longer weekends.  Unfortunately for the current week, that means we are leveling off at the highest rates of the month.

I apologize, but I just do not understand the Fed and the Fed officials. Not an educated economist, just a guy who has been in the markets for 35 years and in the mortgage business 17 years. A lot of talk but no conviction from the Fed during the past few days. The Fed is constantly speaking, one after another, and much of the talk in the last few months has been supportive to the idea the US economy is improving, jobs are plentiful (regardless of the wages paid), inflation is just around the corner, the economy might over heat, China and emerging market economies slowing have little impact on the US outlook, time to begin normalizing rates, etc. Yet in the end the Fed and its officials do not have the stomach to increase the FF rate by a measly 0.25%.

This week had only one key data point, the Sept ISM services index last Monday, other than that there was little to measure. Next week, Monday the banks will be closed but the stock market will trade, many mortgage lenders will price on Monday using information from Europe’s trading on our bonds. Markets will not get recent key data until next Wednesday. The week is full of Fed speakers, save us all.

There is no reason to float now, markets are twisted like a pretzel with Fed comments pouring out daily.</strong> Technicals are no longer bullish but neutral - if the 10 yield increases over 2.15%, the projection would be 2.20% and mortgage rates edging higher. These are good rates and should be taken advantage of now. No one picks the bottom except by luck. After what I said above, I believe the Fed will move this year just based upon peer pressure as most of the people are losing confidence on what they are doing.  Do I think it should happen?  No – but I am only a crazy loan officer who is trying to decipher what is best for my clients.   

In summary, I do not see huge rate moves in either direction looming on the horizon.  If you float, do so with realistic expectations of your possible gains.  Rates are highly unlikely to drop .25% in a short time, you are far more likely to see minor adjustments in closing costs/credits.  Have a great weekend, all.