Mortgage Rates Dropped Noticeably Today

Mortgage rates dropped noticeably today.  That's all well and good, but what if you want to take advantage of these rates, but can't yet lock, or are in the shopping process for a purchase?  While it's true that rates like this have been fleeting in the past, the longer term trends remain squarely in favor of lower rates.  That will continue to be the case until and unless we see a massive move higher from here.  Massive moves are always possible, but they're less of a threat now compared to 2012.   

Bank stocks in the UK, Italy and in the US all took hits today as interest rates continue to fall. In Italy the banks have extreme debt delinquencies and the ECB telling the Italian government to continue to cut spending and more austerity.

The Fed is still in play, at least at some of the big banks - not hearing a lot from US money center banks but Deutsche Bank out with its view the Fed will move later this year. Deutsche Bank however is not one to put a lot of confidence in these days. But another analyst at Deutsche Bank out today is saying there is a 60% of a US recession occurring in the next 12 months. More evidence if you need any, that the future is anything but clear now.   There is one point though that may push the Fed to move later this year, the decline of bank earnings that will continue to lead to less lending.

Friday the June employment report has to be much better than the meager 38K job growth in May. We will not be surprised there will be upward revisions to the May job numbers, the June jobs are expected +180K back to the norms of this year.  Tomorrow afternoon the minutes from the June FOMC meeting will be released. The minutes always seem to have a couple of nuggets, this time may be more. The meeting occurred prior to the UK vote and at that time there was little concern that the Brits would vote to leave. The minutes may serve to offer a reminder that the economy was not looking so hot even before the U.K.

In summary, it all looks good for lower interest rates, in fact maybe too good. the fireworks seem to be coming to the bond market after the 4th this year. The 10yr bond hit record lows today. If closing in the next few weeks locking will not hurt, but in the longer term I would think you may want to float to see where we go from here, if anywhere.