Mortgage Rates Move Higher After Testing a New Low

Mortgage rates moved slightly higher after a strong run to the lowest levels we have seen since the end of November.  As the new week got underway, market participants warmed back up to the notion of risk, thus undoing some of the positivity from late last week.  After the bellwether 10yr tested 2.32%, it was unable to follow through today. This morning, I mentioned in my report that we had opened lower, but the tone was not too negative as we saw some of the negative pull back.  However, it did not last this afternoon.

The markets are going to determine if the Fed is going to move in March, and for that to happen, they must believe such.  The Fed makes a lot of statements and warnings that rates are set to move higher but will not surprise markets for fears of major political flak and momentary disruptions. If the FOMC passes at the March meeting, then the word “gradual” in Janet Yellen’s remarks is meaningless. There are just four meetings this year that are accompanied by a Janet Yellen press conference.  Passing in March would suggest a rate increase every other meeting through the rest of the year. More than likely, I have a feeling after reading from my favorite economist, the Fed will move in March, then in September, and another in December.

Tomorrow evening President Trump is set to speak to a joint session of Congress, similar to a State of the Union address but with no rear-view mirror but all about the future of what he expects. Markets have been eager to get more clarity on fiscal programs.  If the details are well-received, we could continue to see more momentum toward risk, and rates could continue to move higher.

For now, rates are still much closer to 2017's lows.  With all this volatility, I would strongly consider locking loans especially of you are closing in the next 30 days.

In summary, we are back on the pendulum of the same old pattern in bond markets today.  Since we closed last week near the bottom of our recent range, we (of course) lost some ground today, moving back towards 2.4% on treasury yields.  There's a great deal of speculation over tomorrow's address by President Trump, and how growth inducing/inflationary his budget details will be.  Tomorrow's a wild card, so unless you loved to gamble, think about locking in your rate now.