Mortgage Rates Have Not Changed

Mortgage rates have not changed much since Monday morning.  Yesterday we saw some moderate volatility as both the 10yr and MBSs were flat.  This morning at 10:00AM, we see the 10yr at 1.46% and MBSs moving very little up a few basis points on the positive side.  US and global markets still reeling over the shock of the UK vote last Thursday but as the calendar clicks the markets now settling down.

This morning’s data showed Personal Spending matched market expectations with yet another monthly gain. Personal Income also continued their MOM gain trend, but just off the estimates that was being forecasted.  May Pending Home Sales missed the mark on a MOM basis, but that does not mean it was a weak report. On a YOY basis, sales jumped 2.4% from this time last year which is marked improvement from April's YOY reading of 1.8%. The combination of all time high median sales prices along with very low inventory levels is restricting sales from moving at a stronger clip.

From the EU Summit, believe it or not, there are a lot of rumblings that a) either the UK parliament will ignore the referendum vote, b) have a new vote or c) the EU can scare Brittan into staying. But German PM Merkel said that "I want to say very clearly tonight that I see no way to reverse this," when asked about the possibility of a British U-turn on Brexit. "We all need to look at the reality of the situation. It is not the hour for wishful thinking." According to Sigma Research: "We still like the bond and mortgage markets but we also don’t expect any more improvements now while the dust settles. More decline in rates depends on news from Europe.

We are now bound to a very tight mortgage rate range. I am not looking for a lot of volatility at the moment, but given the state of flux in the EU, anything is possible.  Continue to float if you are not closing in the next 10 days, but stay close to the trigger.