Mortgage Rates Finish Lower to End the Week

Mortgage rates finished the week lower from where they started. Trade war concerns yesterday were the major driver of rates this week, despite the fact that we had an FOMC meeting on Wednesday that bumped up the federal funds rate.

Where Are Mortgage Rates Going?                     

>>> Rates finished lower than where they started for the week

Trade fears are increasing as President Trump laid out some specifics yesterday, with China as the main target. China was ready, announcing how they would retaliate if the Trump tariffs actually begin. Global markets are well aware of the outcome of trade wars: no one wins, global economic growth slows, and inflation increases. The president is walking a fine line trying to adjust the inequities in long, dated trade deals as China is being brought to task for its continual violations and ignoring any previous criticisms. The revolving personnel door at the White House also doesn’t sit well with investors.

Mortgage rates ended the week lower than where they started, even though they were a little higher today than yesterday. The bond markets did recover enough ground by the afternoon to suggest Monday's rates will recoup those losses.  The only catch is that other factors can have an effect on bonds between now and then.  If bond markets are weaker by Monday morning, this afternoon's strength will be overshadowed.  Bottom line is that rates should start Monday with a very slight advantage "all things being equal."  

The source of inspiration for the aforementioned bond market strength was a much bigger move in stocks.  The latter are generally freaking out about potential trade wars stemming from recent tariff announcements.  On many occasions, big drops in stock prices correspond with improvements in rates.  Rates fall when investors buy more bonds, and investors often park some of their stock-selling proceeds in the safer haven of the bond market (because there's typically much less price volatility).  Stock weakness is not moving rates nearly as much as normal these days because rates continue to face big headwinds that will not quickly subside.

The yield on the 10-year Treasury note, which is the best market indicator of where mortgage rates are going, is finding support at 2.90% and solid resistance at 2.80%.

Rate/Float Recommendation           

>>> Take action soon to try and get the best rate

Mortgage rates will still be increasing this year, even though we saw a nice turn this week.  We cannot predict the future on when this will continue, or even if there is a little more of a drop, but Pigs Get Fat and Hogs Get Slaughtered.