Mortgage Rates at Highest Levels This Month

Mortgage rates moved to their highest levels this month.  It continues to be the case that there is little rhyme or reason to the short-term market movements causing volatility for rates.  The bigger picture themes are more relevant.  Those themes suggest a trend toward higher rates has taken shape although the implications would be more severe if rates break above mid-December's highs.  While we are not there yet, it is safest to assume that's where we are headed until/unless we see a big shift in the other direction. 

There was much volatility this morning! When I submitted my morning report, it looked like we were heading for another big downturn – but then two things occurred. The Mexican president cancelled his meeting with Trump next week on more comments from Trump Mexico would pay for the wall. The fresh deterioration in diplomatic relations between the US and Mexico came after the US president tweeted earlier on Thursday that if “Mexico is unwilling to pay for the badly needed wall, then it would be better to cancel the upcoming meeting”.  Secondly, this afternoon’s 7yr auction met with strong demand unlike the weak 5yr and the previous two days.  

Trump talked about ObamaCare today but not much on regulations, tax relief or anything else markets are more interested in. The DJIA held a minor gain but the other two indexes about unchanged.

Another support today for the rate markets with weak December new home sales this morning. The report follows Tuesday's soft results on the resale side with both pointing to a housing sector that, instead of rising into year-end, faded instead.

Tomorrow key data comes from the final Q4 GDP, December durable goods orders, and the U. of Michigan final consumer sentiment index.

In summary, rates continued their upward spiral today, convincingly breaking through prior support levels.  The trend is NOT our friend, and the biggest question is how much more rates go up from here, not whether they will drop soon.  Locking early is necessary in my eyes, as I do not see any reason to float and risk further losses.