Mortgage Rates at 3-Year Lows

Mortgage rates finally hit the three-year low mark today along with the stock market rally today.  The best day in equities in two months. There is nothing really pushing these issues, nevertheless it is what it is. The bond market held well in the face of the gains and ahead of tomorrow’s $23B 10yr note auction.

March wholesale inventories this morning and February inventories were revised. The weak inventories will add some concern for Q1 GDP when the preliminary report is released on May 27^th - but there are still more Q1 reports to sift through. It is old data and we are well into Q2 now.

JOLTS -- Job Openings was positive as the rate of jobs quitting at 2.1% and the hiring rate at 3.7% down from 3.8% in February. Treasury sold $24B of 3yr notes this afternoon, as the demand was strong.

Tomorrow another day with little important economic data. Weekly MBA mortgage applications and weekly crude oil inventories. At Noon. Treasury will auction $23B of a new 10yr note. Demand will be important for the 10yr and mortgage markets.  

Searching for a reason stocks increased today, many see it as a result of increasing commodity prices led by crude up $1.20 and the dollar weakness. Bloomberg reporting today that Goldman Sachs says the post-payrolls rally shows that market expectations for growth and Federal Reserve interest-rate increases have fallen too far, too fast, positioning the currency for a rebound. Goldman has made that call previously but it did not pan out. No Fed rate hike in June based on traders in the FF futures trading - traders give it a 4% chance next month and are not expecting a rate increase until the 4th quarter. Still, the Fed is in play next month but with that kind of betting the Fed will be scared off.

In summary, I am optimistic that rates could test new lows in the near future, but I still went ahead and lock loans that are closing in May.   I think short term, you should take the recent gains, lock in and move on.  Longer term closings, those in June or after, I think floating is the way to go.  Floating may return some additional gains, but borrowers need to realize rates move both ways!