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Bart Castelli

Mortgage Rates and September not Good For Each Other

Tuesday, September 30, 2014 - Article by: Bart Castelli - Homestar Financial Corporation NMLS #70864 - Message

Mortgage rates went a bit upward today as September has proven not to be a good month on record this year for interest rates. Things could have been a lot worst if it was not the improvement we have seen in the past week. Even with the slight increase today, the most prevalently-quoted conforming 30yr fixed rate for top tier scenarios remains at 4.25%, with the closing costs associated with this being the only change.

The stock market continues to resist any sustained selling in a correction that even the most bullish expect. Low FF rates are over-riding about anything as long as the outlook for low rates continues. Almost daily we get a comment or opinion or a survey about what traders and investors think about when the Fed will act. The latest survey among bond traders out a few days ago; 76% of those surveyed are not expecting the Fed to move until next Sept. The more consistent forecasts though is that the move will come late Spring or early Summer next year. One new element in the equation that may keep the Fed from increasing rates; the strengthening dollar. The dollar is at its best since 2008; as it continues to gain strength against the euro and yen and other currencies the US will lose some of our export demand lessening economic growth. Imports will be less expensive, some see that as a plus but we need good paying jobs and a decline in exports doesn't lead to more jobs.

We are not being rewarded by floating. With employment Friday and other key data points ahead of that we have to pull back a little on our optimism at the moment. Technicals look good but there has been no real follow-through after braking key points on the 10yr rate. We had strong resistance at 2.52%, the rate has dipped to 2.48% in short bursts but immediately runs out of gas. As we noted a few sessions ago, our target is at 2.45% where there is critical resistance, the pivot between rallies and sell-offs. In summary, yesterday I said that as long as the 10yr remained under 2.5% that I'd suggest to continue to float. My stance has not changed, though it still remains risky. Pay close attention and be ready to lock, because a move back above 2.5% means this was only a failed test at lower rates. Floating cautiously and hoping we see the trend of lower rates continue.

Keep a strong look at the markets and continue to cautiously float if you do want to take a risk. Remember, if you want to know the benefits of locking your rate today versus floating, simply give me a call at 314-744-7806 or visit me on my website at I have access to real time Wall St. data and instant market alerts with breaking news that I monitor throughout the day to assist us on making the informed decision.

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