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Bart Castelli

Mortgage Rates Continue to Climb

Thursday, April 21, 2016 - Article by: Bart Castelli - Homestar Financial Corporation NMLS #70864 - Message

Mortgage rates picked right up where they left off yesterday: pushing into the highest levels of the month. This week has seen the fastest rise in rates since early March. If we lose any more ground tomorrow, it could end up being the worst week since early November 2015. Of course with the average rate still near three year lows, it is hard to draw any overly-dire conclusions about rates in general, but borrowers who were rate shopping as recently as 2 days ago should be aware their quotes have likely changed.

The jobs data was strong, but took a back seat to international events. While Draghi got a lot of attention, he really did not say or do anything new. The only thing that he could have done to help our bonds was to announce a new round of QE and he is a long way from that right now. From a technical perspective, we closed for the second straight day below our 50 day moving average, which is in a negative pattern.

Another issue that has caused us some concern is Oil, as it was above $44 for a while today - but did settle down but still is above $43. If it get above $45, we can see the rates change big time as well.

If you have not locked yet, be aware that the current momentum toward higher rates is the strongest since early March. Then, as now, it does not make much sense to bet against that momentum until it has leveled-off or reversed course.

In summary, rates continued yesterday's ascent today, as pricing declined again. We have broken some well-established ranges in both treasuries and MBS, which leaves the door open for rates to rise further. Anyone within 30 days of closing should probably be locked, or at least aware rates are trending higher. The trend is NOTour friend at the moment. With nothing more to come out in the next few days, I think at this point, the damage has been done. If you can tolerate the risk and afford to be wrong, then you might want to float over the next couple days and see what next week brings. But as always, if you are happy with your current offer, nothing wrong with locking.

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