Mortgage Rates Hold

With the equities markets showing signs of life, the long term bond market, one would expect, would be suffering with yields rising. This however is not that case, and our bond market is holding strong, actually up one tick on the day. Considering an up day last Friday, after a large sell off last Thursday today's resistance to a sell off is very telling, and infers support at our current levels. A couple more days of support like this and a headline that speaks to a negative economy and we would see mortgage backed securities post some serious gains, forcing yields down. Of course the opposite is also true, a headline that suggests a strong economy would most likely lead to a sell off, breaking current support levels leading us to higher rates.

At this point in time, either of these futures is possible (of course), and for this reason we are recommending those that are in the process take advantage of the market and lock now to ensure they do not lose anything trying to wait out a better rate. If we are wrong and rates do in fact improve, renegotiating into a better rate would be an option to explore - so you do have options after locking... The point is, with our market consolidating as it has, we are in a difficult position moving forward. Sitting on yearly highs and close to historic highs, there is more pressure to sell off then there is to buy in, and as long as the 10 year yield is above 2.25 we're stuck... honestly we would need to see the 10 year drop to 2.10 or even 2.00 for us to see a strong surge in mortgage backed securities. At this point in time we're happy with the market holding, and hope everyone that can benefit from a 4.25% 30 year fixed does so, because those are the going rates in CA. Contact us for more details and what it takes to qualify.