Mortgage Rates Continue to be Under Pressure

Mortgage rates remain under pressure over the past few weeks after hitting near-all-time lows in early July.  With one exception, rates have been either sideways or higher every day since July 6th. 

As expected, financial markets were very stable with little movement today – as there was no significant news, the Turkish coup got attention but generally not an immediate factor for markets. The Republican convention started today but the speeches do not happen until later this evening.

July NHAB housing market index did not meet expectations this morning when it was reported.  The same reasoning, no lots and too much time to develop ground. In every part of the country over the last 20 years the time it takes to actually build a home in a new development has increased to about two years, or even longer I some areas. In this economy with uncertainty hanging over it like a black cloud, unaffordability and financing more difficult for buyers, developers are not anxious to spend hundreds of thousands of dollars that may not pay off for years. Tomorrow June housing starts and permits comes out. 

Markets still believing the coming of major stimulus packages from the Bank of England, The Bank of Japan and the ECB. The ECB meeting on Thursday, The Bank of Japan on the 29th and the Bank of England in August.

When the Brits shocked the world by voting to exit the EU the global interest rates fell as money flowed into safe havens. The vote occurred on the 23rd of June. Presently that safe haven move has been completely erased. Erased because of all of the belief central banks (not our Fed) are about to launch more stimulus packages. Will they work to improve the sagging global economies is the question. On the 24th of June the 10yr note yield ended at 1.59% the current level now. This is earnings season, a mixed outlook - some saying earnings will continue to ebb, others expecting a surprise with better than expected earnings and forward guidance. Technically the work is presently bearish.  The 10yr is at 1.59%.

In summary, I do not see much benefit with floating right now. If you are happy with your current quote and are within 30 days of funding, locking today makes sense. Bonds appear to not want to move to lower yields – as each attempt is met with selling taking bonds the wrong direction for those hoping for rates to come back down.