Mortgage Rates Continue to Hover at 5-Month Highs

Mortgage rates continue to hover near 5-month highs, after putting in a mixed performance today.  After the data that came out this morning, even though the local data was a mix bag, a stronger global economic data pushed US bond markets to their weakest recent levels (weak bonds = high rates).  The tense market environment surrounding the presidential election worked in rates' favor in the afternoon.  Headlines broke regarding new documents being posted by the FBI regarding a 2001 probe of the Clinton Foundation.  Although the details and rationale were sketchy, the news logically benefits Trump to an undetermined extent.  Because markets generally associate Trump with greater uncertainty, and because uncertainty motivates bond buying, bonds improved rapidly into the afternoon.

The FED has begun their two days of meeting and tomorrow we will get their Interest Rate Decision and Policy Statement.  This afternoon we had a strong September Total Vehicle Sales report as it crushed market expectations (18.29M vs 17.50M) which is the highest reading in several years.  I guess the auto unions are more influential than the housing/mortgage lobby ever were because subprime/no doc loans are just fine for autos that lose value every day.

Despite the drama, and the fact that rates are legitimately at their highest levels in 5 months, it's good to remember that the last 5 months have been some of the best in the history of mortgage lending.  Tomorrow brings the 2nd-to-last Fed announcement of the year.  Some traders expect the Fed to telegraph a hike coming up in December.  The absence of such clues could be the thing that helps mortgage rates stage a small recovery, but that's not the sort of hope that should dissuade the average borrower from leaning toward locking vs floating.

In summary, the overall trend is not our friend currently which would suggest that locking is the way to go.   I do not see any benefit in floating right now.   Until this trend is broken, locking is the wise move.   We typically do not see much motivation for pricing to improve during NFP week, and I would be shocked if tomorrow's Fed announcement provided any.  In fact, it may be more non-committal than most Fed statements, which is saying quite a bit.  My pipeline is locked, and until I see sufficient drama or economic angst to change the trend of rising rates, I will keep locking sooner rather than later.