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Bart Castelli

Mortgage Rates Keep Heading to Recent Lows

Tuesday, December 9, 2014 - Article by: Bart Castelli - Homestar Financial Corporation NMLS #70864 - Message

Mortgage rates keep heading to recent lows again today as the US Treasuries and Mortgage Backed Securities (MBS) continue taking cues from European bond markets. The most prevalently quoted conforming 30yr fixed rates for top tier borrowers was still at 4.0%,but 3.875%was being sought after even with the fees attached to that rate.

The stock market led bond and MBS's higher this morning when the DJIA was off over 170 points. However, the indexes rallied back a bit in the afternoon after my morning report. The 10yr at one point was below 2.20%, but settled at 2.21% when it closed. It is amazing to see how these two are linked these days.

China's economy, based on the continual news, is slipping. Europe continues to loose economic ground as inflation falls further. Falling oil prices could push the euro-area inflation rate below zero, just as policy makers prepare to examine options for quantitative easing. Crude oil declines are getting more traction in the context of inflation, as it falls it will take all commodities with it and add deflationary concerns.

Watching all markets in a composite view strongly implies strong volatility is coming in most markets. The bond market remains bullish, but as we have mentioned, at these low levels to continue, the market will have to be fed a huge diet of negative economic data and more weakness in global data... and with the Fed thinking about changing their language regarding interest rates, there is more volatility yet to come.

In summary, today's bond market activity was very bullish, even though the MBS's never really got much the same steam. With the reality of Eurozone issues still in play, and obvious concerns with global economic worries connected with China, floating may still be the right move. It does concern me that the MBS's did not follow as strong so even though I would float, be a little cautious and wait until the bonds open in the morning to see where the day brings us.

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

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