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Bart Castelli

Mortgage Rates Improved Following ECB Conference

Thursday, December 4, 2014 - Article by: Bart Castelli - Homestar Financial Corporation NMLS #70864 - Message

Mortgage rates improved following the ECB press conference with President Draghi. Even though there is no direct correlation between the mortgage rates and this announcement, somehow a connection was made and stock prices and bond yields sank - which prove beneficial for Mortgage Bond Securities (MBS). The most prevalently quoted conforming 30yr fixed rates for top tier borrowers was still at 4.0%, but 3.875%came into the picture again today.

Today is one of those days that caught me with my pants down as the 10yr note rallied nicely taking MBS prices higher ahead of the report tomorrow. Technically we still hold a positive bias for the bond and mortgage markets in the near term, however I did not expect the kind of support we saw today. The take away for me is that tomorrow's employment report will not be a crucial as it is normally is because markets are more and more coming around to understand that there is no inflation now, and there is not going to be for quite awhile, regardless of the number of jobs announced. No possibility for wage increases and consumer spending still very slow except for auto and truck sales = as other consumer spending remain weak.

Just a FYI, the 10yr had a nice day as it went away from the resistant level down to 2.24%.

In summary, to lock or not to lock is the question on everybody's mind today ahead of the Jobs Report. Technicals favor floating, as we are trading below specific levels that would warrant more caution. The only downside is that unless unemployment data is a disappointment, the likely result will be a modest improvement to costs associated with rates than the actual rate itself. Tomorrow will tell the tale of the tape, but my suggestion was to lock ahead of the report as it could go either way.

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 my website at I have access to real time Wall Street 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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