Mortgage Rates Higher to Start off the Week

Mortgage rates bounced slightly higher for the first time in more than a week today, thus remaining in limbo near the highest levels in more than 4 months.  On a positive note, recent movements have been small, with no change to the prevailing note rates but a change in the fees associated with the rates.

The 10yr did move down to 1.74% before it ended the day at 1.77%.  MBSs were up as much as a positive 15BPS and settled down in negative territory at 9BPS.  There were no economic reports today. 11 sessions now with no real change in interest rates to speak of.

 Two housing data and the Oct consumer confidence index tomorrow, August Case/Shiller 20 city price index and August FHFA home price index. The more important data is the consumer confidence index expected to have slipped from a huge gain in September.

More than a third of S&P 500 Index’s members are scheduled to report results this week. So far earnings reported have been better. Earnings in Q3 were widely thought to be flat for the quarter just a month ago before reporting began. Mergers today were the center piece, led by Time Warner/AT&T. Both AT&T and Time Warner stocks dropped - markets do not believe it will get approval from regulators. TD Ameritrade agreed to acquire Scottrade Financial Services for $4B in a deal that merges two online discount brokerages facing pressures from declining trading volumes and shifts in technology.

Oil a little lower today - Iraq wants a pass because of the war with Islamic militants. Iraq is the second largest producer in OPEC. OPEC scheduled to meet next month to try and cobble a deal together to lower output.  Likely any deal will not last until the first of the year if there is a deal. It is everyone for themselves in the oil world.  

Two weeks before the election and one week before the FOMC meeting. No change in the outlook for interest rates. Best to look on getting things locked as I do not see any movement downward.

In summary, Risk-takers can try to time the dips in rates that may occur during that broader uptrend, but the reward for good timing generally is not worth the risk in these situations. We would need to see a sustained push back toward lower rates (something that lasts more than 1-3 days) before anything less than a cautious, lock-biased approach makes sense for all but the most risk-tolerant borrowers.