Mortgage Rates at the Bottom of the Range

Mortgage rates moved lower today, but these changes are so slight that they are only be seen in the charges associated with the rates being quoted.

This morning’s Jobless Claims report came in as expected, even though this report has not had any significant change on the interest rate environment for some time now.  The Treasury did have its 7yr note auction, and it had solid results, much better than the previous three months’ results.  Tomorrow we get Consumer Sentiment and New Home Sales.

The path ahead is uncertain as we have seen some days that the market volatility drives the scales one way or another. The good news is that mortgage rates are still at very low levels historically, and they do not seem poised to surge significantly higher anytime soon. For months now, I have been suggesting that braver readers might consider floating – regardless of daily fluctuations – in anticipation of a possible fall in mortgage rates. Well, that fall began on the last few days in December. 

We have seen them better than they are today. So far in February, there have been eight business days on which rates rose, and eight on which they fell – but overall, we have been in a very narrow range.  There have been repeated swings of late, which makes forecasting into the future beyond a day or so challenging.

So many observers would urge you to grab your gains (lock) soon in case upward movements continue and quickly wipe out gains. Meanwhile, others might advise you to continue to float in the hope falls will predominate in coming days and weeks. Given the unpredictability and potential volatility currently in markets, only you can decide whose advice to take. And what you choose to do will be largely down to your personal tolerance for risk.

In summary, we had another tough call today.  We are at the bottom of the two-week range and very close to the bottom of the three-month range.  If you believe in the range, then it is time to lock because yields cannot go lower than the range, right?  Wrong. It is only the range until it breaks.  Will this one break?  No clue.  I suspect it needs to break soon due to the consolidation pattern we are in.  If you can sustain a little loss, then float on.  If the ranges break to the low side, then you will be handsomely rewarded.  I can see why many would be tempted to float.