After improving for several days and
falling in line with all-time lows, Mortgage
Rates took a step back today. Just as most of yesterday’s gains
were in the form of borrowing cost reductions, most of today’s weakness will be
experienced in the form of higher borrowing costs as 3.875% remains a prevalent
Best-Execution rate. But like yesterday,
some scenarios may be looking at a slightly different rate today.
- BESTEXECUTION 30YR FIXED – Less Firmly 3.875%, More 4.0% Offerings
- FHA/VA –
still at 3.75% !!
- 15 YEAR FIXED
- 5 YEAR ARMS – low
to mid 3% range, variations from lender to lender.
Ongoing Guidance: I’d lean more heavily toward locking when Best-Ex is under
4.0 these days. While I’m optimistic that there are a few more gains in
store for MBS with the beginning of new Fed Buying, I’d hate to see 3.875
unexpectedly evaporate on some surprise headline out of Europe or turning point
in economic data.
New Guidance: Take a look at yesterday’s
guidance. Here’s the graphic
Today’s losses may have moved your
scenario further to the right side of the spectrum making it seem relatively
more advisable to float. While that is
in fact the tacit suggestion, there are two caveats.
First, The Employment Situation
Report will be released this Friday and may well exert some influence on
interest rates. Bottom line, a big
enough number on that report could cause rates to break out of the current
range, even if only temporarily.
The second caveat is a bit more
subtle. In general MBS prices tend to
move in the same direction as longer maturity Treasury prices, which tend to
move inversely with stocks (meaning Treasury yields move in the SAME direction
with stock prices). The late day
come-back in stocks today brought averages just high enough to cast some doubt
as to whether or not yesterday’s stock market losses were a sign of things to
come. If stocks are able to rally
further, it could continue to exert pressure on bond markets.