Mortgage Rates Start to Climb

Let's not get ahead of ourselves, despite worsening rates right now, let me begin this post by mentioned we are still trading well within our established range so there is no reason for us to hit the panic button yet. With that said, the mortgage backed securities market is currently testing its support levels and the 10 year treasury is currently testing its resistance level. Should we break out of this established range, things could get interesting.

A couple things to consider. First, it is Friday, and typically Fridays are not a good day to base trends off of due to the typical low volume traded. Point in fact Friday's are considered by some as a profit taking day, so a sell off today is not something we should get too concerned over.

In addition home loan applications are falling off which means less demand, so the money available to offer goes further. This should help calm the storm should rates start their climb higher, but it is by no means an answer to the rising rates the market is starting to offer.

Considering the run we have had in the secondary market we should be pleased with the rates currently offered on home loans. Even though we have lost some gorund today, over he last week we have seen steady gains that have lead to better rates offered. This minor sell of will result in slightly worse pricing, but we are still up from recent lows, so there is little to complain about.

Regardless tracking today's activity and keeping a close eye on monday will be mandatory. A firesale is still a possibility and we have to take into consideration the equity markets. Corporate profits by in large have been strong, inferring a stabilization of the stock market (although some believe it is due for a retraction). If this remains the case, we will see more and more investors return to short term markets which will bring an end to these low rates.

Secure em while you have the chance.