Mortgage Rates Hit Low Point for the Month

Mortgage rates continued to head down the path where we are now seeing them at the lowest point of the month.  Was today the beginning to the long-awaited and overdue retracement in the stock market? Political uncertainty certainly sparked the biggest day of stock market losses since the election.  It is too soon to know yet, but the bond market has been signaling a rough road ahead for stocks since the FOMC meeting last week.

The “blame” for the selling today in equities is the uncertainty increasing over the health care bill and thus the tax cuts. The 10yr now has declined to 2.43% where it was well above 2.6 just last week.  I have stated this many times, even before the elections that there might be a market correction, but when President Trump won, the stock market worlds have made very large investments in equities, here and over the globe. Like the second coming - after eight years of nothing from Washington and fumbled geo-political decisions the Trump win somehow has been the savior of healthcare, tax cuts and fiscal spending.

I have stated it here many times that the Trump platform is generally good, but it will not happen as soon as markets were believing. Now markets may be moving back to reality, even if there is talk on CNBC that there are legitimate excuses for all this.

The bond market generally gets it right before stock investors do. This time maybe no different, as finally a down session in equities but the bond market has been telegraphing it for a week now. Mortgage originators having their share of issues with the rapid decline as consumers want to re-negotiate as is the custom when there is a quick change better in mortgage rates. In the world of mortgage lending there is no such thing as a guarantee if rates are declining – we cannot have our cake and ice cream all at the same time in heaping helpings.

With the 10yr at 2.43%, the new target is now being looked at as 2.32% per David Shirmeyer of Teno3magnet.  Could be choppy as the stock market will not go down that easily.

In summary, ass we saw yesterday, bond markets continued to rally today, and at a more vigorous pace than last week.  US economic growth/fiscal reform concerns are boosting bond demand.  While we are still nowhere near our post-election rate lows, at least we are seeing rates trend downward. There is nothing wrong with floating here with caution, unless doing so will cost you sleep.