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Bart Castelli

Mortgage Rates Retreat Higher

Tuesday, December 2, 2014 - Article by: Bart Castelli - Homestar Financial Corporation NMLS #70864 - Message

Mortgage rates retreated higher after heading south for the last seven days. The most prevalently quoted conforming 30yr fixed rates for top tier borrowers started out with 3.875% but 4.0%became more favorable as the day wore on.

More selling today in the bond market that strongly implies the rally last Friday was a one-time event on knee jerk reactions in thin markets when OPEC did not cut production. There has been no follow through from the drop in rates last Friday and now the 10yr is back to the level it traded at last Wednesday. That said, our models are still fractionally bullish even with the increase in rates the last two sessions. The 10yr is working on its pivot level at 2.30% and 2.32% which is critical for near term outlooks.

Equity markets were supported today by very good November auto sales. However, credit card debt is still at 8% lower than at the end of 2009 and mortgage debt is growing at a snail's pace. October construction spending was also better this morning.

Tomorrow begins the 48 hour employment debate with ADP out at 7:15am followed Q3 revised productivity and unit labor costs. Later the Fed's Beige Report will come out at 1:00PM. All this before the all-important Employment Report on Friday.

In summary, yesterday's volatility continued again today. Even though we lost a little ground, tomorrow begins the onslaught of major economic news that can bring volatility to the extremes one way or another. My stand continues to lock if you are within 15 days of closing and if you are feeling lucky, and I mean real lucky, be prepared to accept the potential for higher costs/rates if it does not retreat lower.

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