Mortgage Rates Fall Back into Range

This last week has been anything but favorable to mortgage rates. Last Thursday we hit new record highs, busting through every ceiling history had produced, wetting the lips of every originator waiting for lower rates. This sharp upswing was almost perfectly vertical, suggesting a strong demand for new coupons.

Since this buying frenzie, we have seen a sharp sell off as investors took profit. Let's be clear a sell off at new highs is to be expected. What we saw however was not jsut a mere sell off, it was a exit from MBS leading our markets down, down, down... forcing yields back up and rates higher.

Okay okay... enough doom and gloom. Yes rates are not were they were last Thursday, but were we sit right now is on our previous resistance, which has turned into support since last Thursday.

What does all this mean... we've entered a new range, currently sitting on its floor waiting for the market to push us higher in price and lower in rate.

There are a couple of important revelations that took place that should be pointed out. First during this corrective period we saw the 10 year fall to 1.72 in yield. It is now back at 2.00 in yield. Of course the MBS follow the buy and sell trends of the 10 year this last week, however our markets have faired better than the treasury markets.

Like I said, we are now sitting on new support which use to be our resistance. This run at the bond market has essentially forced us into a better range. So when the 10 year begins to creep down again in yield, the MBS markets should also produce lower yields which means better rates.

Ultimately I think we will see lower rates in the coming Winter months. Add all this up and the name of the game is patience. While wealth favors the prepared, I suggest getting everything in order so when the low rates do return you can execute.

Execution is the name of the game, and waiting until rates are available typically means you will not be able to close in time to realize that rate. Pay attention to locks and the lock period... watch turntimes carefully.... they will increase which can force lock extensions which cost an additional premium. Manage you time productively and you'll be able to capture an incredible low rate in the months to come.