Today's Mortgage Update

BY: MATTHEW GRAHAM

Mortgage Rates rose again yesterday, even though underlying bond markets managed to indicate modest improvements. There are two reasons rates ignored those improvements. First of all, they weren't really intact at the beginning of the day when lenders were compiling rate sheets. Even then, most lenders were still in worse shape at the end of the day when bonds gave them the green light to offer lower rates. 

The other issue is that lenders had almost all repriced negatively in the middle of the day yesterday, and they did so before the bond market losses had run their course. Markets have to move by a certain amount for the average lender to go to the trouble of changing rates in the middle of the day. If markets don't move enough to prompt mid-day reprices, the direction of the movement is often reflected in the following day's rates. That's why this morning's rate sheets were noticeably worse than yesterday's. 

While the market stability is a potential early indication that this rate spike has run its course, it's too soon to bank on it. There are past examples where we've had a quick little market recovery like today only for things to get worse in subsequent days. That may not happen this time around, but that fact that it has happened (and COULD happen again) is enough to suggest caution. 

Loan Originator Perspective

Bonds confirmed a breakout yesterday to worse territory for rate shoppers.  Until the market settles, my clients and i favor locking in. Even if bonds manage to rally, lenders will be very slow to pass along any gains. So lock and move on.

Have a great day everybody!