Mortgage Rates Again at 7-Month Lows

Mortgage rates started off higher this morning, but by the end of the afternoon, they had settled close to the lowest levels we have seen since early November.  This is the second time we have hit these rates since we were here several weeks ago in mid-April.

There is nothing left for the week on domestic reports. Fed officials are unable to speak (thankfully) this week, the black-out period prior to the FOMC meeting next week. Wednesday the director of national intelligence, Dan Coats, and the director of the National Security Agency, Adm. Mike Rogers, will appear before the Senate Intelligence Committee. Thursday Ex-FBI Comey is scheduled to testify, what he has to say about his dealings with Trump is the highlight of the week so far.  Trump said today he will not invoke executive privilege on Comey testimony.

With rates being driven by financial markets and with investors generally on edge ahead of Thursday's congressional testimony, it makes sense to Friday's momentum to ebb to some extent.  Thursday should remain a focal point for volatility this week.  Remember, volatility (and thus, the risk of floating vs locking) goes both ways.  If Thursday ends up being a watershed moment in US political history--as some suggest--rates could easily continue to new lows for 2017.  If, on the other hand, the testimony is anticlimactic or casts Trump in a favorable light, rates could rise very quickly.

In summary, bonds were idle today, as treasury yields failed to break stalwart resistance at 2.15%.  While it's not surprising we are stalled at these levels, it does mean rates may be primed for a bounce back up.  If you are floating, and closing within 15 days, it is time for a gut check.  With a Fed meeting looming next week, it would take ample motivation for bonds to rally further here.  Frankly, I do not see it happening.  Float with caution, or better yet, lock up the gains while the getting is good.