Mortgage Rates a Little Higher

Mortgage rates moved a little higher today after we got the morning reports. Even though the data was not much of a surprise, but more can be derived that this was a bit of a correction after seeing the best streak for rates in the past two weeks since the election.

I mentioned this in my morning report as I had seen the low trading numbers and the volume was not there.  MBSs did close at a negative 30BPS and the 10yr at 2.42%, right where I left them and stated that I did not anticipate much deviation from where it was at, despite the volatility that still continues.

The good news is that even though there was a little bit of a setback, rates are a lot better than they were just a few weeks ago.  Yesterday, we were celebrating that we saw big movements in the right direction – and even though today might be seen as “here we go again” – I do believe all this was that of a correction.  If we find rates moving higher again early next week, the celebration will be over.

With the incoming administration's policies driving a large portion of upward rate momentum, mortgage rates will be hard-pressed to return to pre-election levels until well after Trump takes office.  Rates can move for other reasons, but it would take something big and unexpected for rates to get back to pre-election levels.

In summary, we would need to see a sustained push back toward lower rates (something that lasts more than 3 days) before anything less than a cautious, lock-biased approach makes sense for all but the most risk-tolerant borrowers.  The beginning of 2017 may be bringing such a push, but there is no telling how long it will last.