Mortgage Rates & Where We Stand...

Good Morning!!!? The market closed yesterday pretty much as I projected yesterday.? We finished slightly in the GREEN but nothing earth-shattering.? Mortgages are certainly outperforming the 10yr treasuries as bond traders may be switching their “indicator” to short-term treasuries like the 5yr or the 7 yr which means they might believe that whatever loans that are originated now have a good possibility of being refinanced and or paid off in the shorter term and not their normal 8-10 yr durations…? We are still seeing a “buy on the rumor” and “sell on the news” mentality as mortgages and 10-yr treasuries fell notably during the weeks up to the FED decision this week.? Some of the upward movement in mortgage rates since the FED announcement is pretty much squaring off positions and should start more normalizing today.?

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I understand having the tough conversation with your current clients as to why mortgage rates did not fall after the FED announcement earlier this week and honestly actually rose slightly.? But it is simple if you put in these terms that the mortgage market anticipates FED moves and as we said earlier this week….the market had already “baked in” at least a 25BP move and it appears they “baked in” maybe close to 50BP given the reaction we have seen over the past 48 hours.? The best example of what I just described is that 30-yr mortgage rates were around 7.75% just one year ago...prior to this past Wednesday…how many FED cuts have we had since last October up to this past Wednesday…rates are down almost 1.5% since last October???? The answer …NONE…So, why would the 50BP cut on Wednesday drive rates down .50% ???? If the mortgage market actually “followed” FED moves…I believe the FED owes us another 100BP cut??? ??? I certainly understand the average person believing that mortgage rates dropped .50% this past Wednesday but once you explain this to them…the explanation makes perfect sense….? Well, I hope…??

?Hope you have a great weekend and don’t expect anything wild and crazy today…I am staying with my flat to maybe a little better today forecast.?

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