Tuesday, February 16, 2016 - Article by: Bart Castelli - Homestar Financial Corporation NMLS #70864 -
Mortgage rates continued slightly higher today and leaving behind the one year lows we had reached last week. The modest amount of movement presents a bit of a curveball in assessing the longer-term trend. When rates fall as quickly as they have over the past 7 weeks, one can increasingly count on these sorts of bounces. On the occasions where the longer-term trend is over, the bounces typically maintain a certain upward momentum for several days. Today, by contrast, we saw the upward momentum fade from Friday's increase. As such, it's still too soon to confirm the end of 2016's impressive trend toward lower rates, The risk is that it's also too soon to say this is NOT just another day in that confirmation process.
US stock markets ended better today with the 10yr note at 1.78%. As I stated the last few days, both the stock and bond market have become technically over-extended and consolidation and retracements in both markets was likely.
The headlines this morning talked about Russia and the Saudis were attempting to put a freeze on oil outputs. The meat though was a caveat that other producers would have to go along with the freeze. Iran and Iraq as well as other producers are not expected to accept the freeze. That is not very likely, both those countries want dollars as rapidly as possible, freezing output would lessen incoming revenues. Crude oil today after trading lower last night is lower.
This morning the Feb NAHB housing market index was expected to improve, but instead declined. The six month outlook did increase by one digit. The present sales, buyer traffic and sentiment declined. The decline of the index was primarily driven by a 5 point drop in buyer traffic, weather likely played its part, as it generally does this time of year. Housing with these low mortgage rates still looks good for this year.
Still holding bullish bias in the bond and mortgage markets but as we forecasted last week a rebound was highly likely. That said though I do not like floating to much longer unless you have some time on your hands. These are very good interest rates and should not be ignored completely. The world in chaos these days with little conviction that equity markets won't eventually turn back to strong declines.
In summary, rates were largely unchanged today, but remained near recent lows. I might be looking to lock anything now closing in the next 30 days as I would rather lock a little too soon than too late, given that current pricing is nearly the best in a year. There is nothing less appealing that calling clients to discuss how much their pricing worsened overnight, not fun for anyone.
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