Mortgage Rates Rise Over Fear of the Unknown

Mortgage rates today opened higher than they did yesterday morning. Yesterday afternoon, the Fed minutes did not really surprise anyone. However, what is really moving the needle is Twitter-fed fear of Middle East warring. This has caused the MBSs to trend down all morning, with an increase in the 10-year Treasury pushing the ceiling on where we have been for several weeks.

Where Are Mortgage Rates Going?                     

>>> Fear is pushing the rates upward

On a week where the calendar of events had every right to push bond yields more decisively away from their most important recent technical level, we have instead seen a narrow consolidation centered on that same indecisive technical level.  There are a few moving parts to consider when attempting to anticipate the next move, but ultimately, the way yields move with respect to established technical levels will be our best source of guidance until the next big trend in 2018 makes itself clear.

Simply put, a "technical level" is any price, yield, or trendline that has proven to be more relevant than other prices, yields, or trendlines.  "Important," in this context, typically means that the price/yield is more likely to bounce when encountering the technical level, but it can also mean the technical level is serving as a central point of gravity, around which the price/yield is orbiting. 2.80% has been that important number, as it has been a firm floor, then a firm ceiling, and now a central point of gravity.

We were not anticipating much movement today in the bond and mortgage markets, but there is definitely some nervousness about selling US treasuries with the unknown about what Trump and Europe will agree about Syria and when it will occur keep rates generally unchanged even with the prospect of inflation increasing. We do not believe Trump will walk away, there will be some military response however what and when is questioned now after the Trump tweet this morning. 

Rate/Float Recommendation           

>>> Do not get caught, best to lock

There is just too much volatility going on right now that the market is trying to speculate on which way it should go. Long-term rates are expected to move steadily higher. It makes sense, then, for most borrowers to lock in a rate as soon as possible.

In a rising rate environment, the decision to lock or float becomes complicated. Obviously, if you know rates are rising, you want to lock in as soon as possible. 

However, the longer you lock, the higher your upfront costs. If you are weeks away from closing on your mortgage, that is something to consider. On the flip side, if a higher rate would wipe out your mortgage approval, you would probably want to lock in even if it costs more. If you have yet to talk to a lender, give me a call or visit my website at CallThe Money Man.