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Bart Castelli

Mortgage Rates Heading Towards All-Time Lows

Wednesday, January 14, 2015 - Article by: Bart Castelli - Homestar Financial Corporation NMLS #70864 - Message

Mortgage rates are heading to all-time lows that were last seen in September 2012, but we are premature in stating that we might get close to that as there is still a lot of room between those rates and today's rates. The most prevalently quoted conforming 30yr fixed rates for top tier borrowers was at 3.75% with no fees, but 3.625%did not have as much fees than what was quoted yesterday.

Standing back from markets what you would see is a completely confused markets. All of the certainty echoed last year has been dumped in the round file. Intraday volatility is all one needs to look at to understand the current condition in stocks and commodities prices moving in wide ranges. This kind of trade confirms investors are becoming more nervous about their investments, not sure what the fall in oil prices and commodities means for the world economies. Over the last three years the focus has been on the Fed's QEs, all last year and especially the past three months the overwhelming belief has been that the Fed would begin increasing interest rates by mid-year. In the last week the belief that Fed has to begin increasing rates has been dashed on the rocks.

No matter how hard central banks have worked to increase the level of inflation there has not been any success. Inflation is as far off the table now as at any time in the past ten years. Prices are falling, wages have shown no improvement, and it is becoming clear now that demand is slowing as the world's economies struggle. Last year the main bet was that the US economy would rebound because the job market improved. Yes, on the headline but as we continuously comment the job market data on the headlines is better but once again with emphasis - the job market is weak. Job creation gets huge amounts of ink and there have been comments from the Fed and others the created jobs are mostly at the low end of the pay scale. Until a week ago quality of those jobs didn't matter to investors - that worm has changed.

Near term support for the 10yr note is up at 2.02%, with MBS support 102.48 (presently at 102.83) for the 3.0 coupon. For day to day trading be careful that profit-taking may reverse the current sentiment. With these low rates market will become jittery and must feed off continued weakness in oil and equity markets. The rest of this week and all of next week will be marked with high levels of volatility. Today's low yield for the10yr was 1.78%, down 12 bps from yesterday's close, but the yield edged up this afternoon to 1.86% and closed there.

In summary, mortgage rates improved again today as we head to all-time lows, but when that will occur remains to be seen. Can you say VOLATILTY? Stocks and bonds were all over the place - and this could level off and be a new floor. We are here because of the issue in Europe, and I hate to rely on something that makes no sense whatsoever, as the markets can shift and go up even faster than they came down. Lock if within two weeks of closing, and cautiously float if you can stomach the risks.

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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