Mortgage Rates Moved Higher Today

Mortgage rates moved higher at their quickest pace of 2016 today.  Rates have been faithfully following the slide in equities prices at a slow and moderate pace.  Today reminded me on how gas prices are at the pump – one day they are heading down ever so slowly, and then boom, up they go.  With stocks capping their best two days of the year this afternoon, it was no surprise to see rates go up.  However, I am not surprised as I wrote about this on Wednesday that we would see this turn in both the stocks and the rate markets.

Oil has surged ahead and the stock market is up triple digits yet MBS are not under more pressure. Why?  Because the German Bund closed down and provided some needed support and is reflective of overseas sentiment towards more QE by the ECB in March.  MBS did sell right out of the gate this morning on the rising oil prices, but then recovered nicely even in the face of further gains in Oil prices. Oil started rallying in direct response to the massive wave of cold weather and speculative trading which lead a big movement in covering shorts.

The data from this morning saw housing sales spiking in December, but a chunk of that was from a pent up pipeline of mortgages that were stuck in this regulatory swamp of TRID (which is the WOST thing for the mortgage industry and consumer ever). Inventories remain tight and the NAR warns of very tight inventory levels in the Spring.

Next week we do have the FOMC meeting and we do know that there will be no rate increase, even though the Fedspeak has died down, they are basically keeping a low profile in light of what has happened in the marketplace and overseas.  The 10yr did close at 2.06% as that 2 mark is hard to stay below such.

In summary, 2016 so far has been great for rates.  Normally when you see drops this large and this quick we tend to see rates jump back for a short bit before deciding which direction it will go.  Because of this volatility, I have changed my stance from floating to locking loans that are to close in the next 15 days.  Let’s see what Monday brings – and to my friends on the East Coast – stay warm, enjoy the hot totties, and do not work too hard shoveling the snow.