Mortgage rates moved higher again as financial markets prepare for the results of the U.K. referendum on its European Union membership (aka "Brexit"). In general, rates are expected to rise if the U.K. remains in the EU, and rates could fall back toward recent lows if the U.K. votes to leave the EU. Current betting in the UK betting parlors - 5 to 1 to stay - 1 to 5 to leave.

Here and in the currency markets the betting is to stay. US stock indexes rallying and US treasuries seeing increased rates as the hedges for an exit are being removed. According to those in the UK it will be early tomorrow morning in the US that the results will be tallied. About 2:00AM is what I am reading.

Britain does not allow exit polls so it's about the totals. If the vote is close and to stay the fallout over the dissatisfaction will not disappear and the uncertainty, while less, will still carry over to the underlying issues of independent sovereign countries against the authoritarian heavy hand of the EU will continue. The top four EU officials in Brussels are not elected, the British upheaval will have legs going forward. That said a stay vote will push US interest rates higher and MBS prices lower.

Tomorrow we have May durable goods orders and the final U. of Michigan June consumer sentiment index. Data tomorrow is not likely to be noticed in prices with the UK vote being dissected all day. Tomorrow also has Dallas Fed President Kaplan will wade in on the UK vote and of course his take on another rate increase. Lord help us from the Fed and its confusion.

In summary, you do not want to be on the wrong side of the trade. In all likelihood there will not be an exit, and markets have not fully priced this in. Locking in for 30-45 days makes sense. Depending on the data to roll out in the following weeks we may see rates dip again, but for now I am preparing for the worst.