Mortgage Rates Just Slightly Higher; Volatility Ahead Sep 3 2014, 3:56PM Mortgage rates started the day heading higher after overnight news of a potential ceasefire in Ukraine caused investors to quickly sell safe-haven assets. The mortgage-backed-securities (MBS) that dictate mortgage rates fall into this safe-haven category along with US Treasuries. When investors are selling MBS, prices move lower and rates move higher. As the day progressed, however, financial markets steadily backed away from the overnight momentum. Stocks weakened and bond market improved. There is an hour or two in the morning where MBS are trading before most lenders come out with rates for the day. Much of the overnight weakness was erased by then, allowing lenders to price fairly close to yesterdays latest levels. As markets improved into the afternoon, several lenders released improved rate sheets, bringing the average even closer to unchanged on the day. 4.125% remains the most prevalently-quoted conforming 30yr fixed rate for top tier scenarios. Todays weakness would be limited to affecting closing costs. That means actual interest rate quotes shouldnt change from yesterday--just a small adjustment to the upfront costs--if anything at all. Tomorrow ushers in more volatility as one of the key near term events takes place. Much of the pervasive strength in mortgage rates is a direct result of European financial markets. Specifically, most investors see the European Central Bank (ECB) embarking on a sort of quantitative easing program bearing some similarities to QE in the US. The consensus is that this would happen by early 2015, but tomorrow brings one of the monthly meetings and press conferences from the ECB. This could be used as a venue to further the discussion on how a QE program might take shape. To whatever extent that discussion deviates from the markets expectations, we could see bigger movement in rates, for better or worse. Loan Originator Perspective After a weaker opening, thanks to more false headlines from Ukraine, mortgage backed securities have managed to regain all the mornings losses. As of 2pm est, no lender has passed along any of the improvements. Tomorrow we get news from the European Central Bank that could definitely impact rates. For rates to move lower, we need Draghi to speak of potential easing. With no talk of EU QE, rates will probably worsen. And Friday we get the jobs report which is another highly potential market mover which makes floating risky. If locking today ahead of those events, wait until as last as possible to allow lenders to pass along the improvements. -Victor Burek, Open Mortgage If you must lock this week, I would lock and look to avoid the swings were likely to see the next few days with new data releases. Get off the ride, if you cant and or dont want to risk what is likely some worsening in rates throughout this week. -Brent Borcherding, brentborcherding Rates seem to be in a pause until the ECB announcement tomorrow. While weve been receiving hints of a new QE program from Europe its likely we wont see anything definitive tomorrow. Just more jawboning. The result is well probably continue to bounce around a tight range until something new comes to dislodge our thinking. The all important Jobs Report on Friday could do that but my guess is not. I would lock short term closings and maintain a wait and see position for the longer term. -Hugh W. Page, Mortgage Banking Officer, Seacoast National Bank
Posted on: Thu, 04 Sep 2014 15:08:23 +0000
Trending Topics
Recently Viewed Topics
© 2015