The post-election mortgage market continues to rise exponentially, but in this last week we did see a couple of days of reprieve. After three straight days of descending mortgage rates they began to rise again in what we could call a period of unrest among lenders. There were also weaknesses in the bond market but that mostly affected the US Treasuries not the mortgage-backed-securities, which is why we were looking at improvements early in the last week.
Though this small space allowed lenders to keep their rates without “repricing” it is likely that if the bonds don’t change rates will be higher in the coming week. In top tier 30yr fixed quote mortgages 4.125% seems to be the number and it will take a substantial shift in the market to get the rate up to 4.25%. Risk tolerant buyers are finding themselves faced with a tough decision facing the first “stop loss” level for those interested in the current bond markets.
An article on Mortgage News Daily written by Matthew Graham had some quotes to add from the perspective of the loan originator. Vice President – Loan Officer at Salem Five Jason B. Anker said, “Today wasn’t what we were looking for but you can’t win them all. Locking in gains now wouldn’t be a bad idea for short term closings. Longer term I’m not convinced today marks the end of a trend. I’d be willing to float though a small amount of additional losses from here. My stop loss for locking is 2.42.”
Senior originator Ted Rood added, “Bond markets took a breather today, and rate rose after dropping the past 3 days. This is hardly surprising, and further reinforces our current rate range. There’s still no apparent long term trend here, and any short term trends seem to last a few days at most. In situations like this, I tell borrowers if they’re happy with current pricing, might as well lock and take uncertainty out of the equation, presuming they’re within 30 days of closing.”
Since hitting those all-time lows in July of 2016 rates have been trending higher only to explode after the November elections. Many experts think that this trend of lower rates that has been in effect for almost a decade have reversed and expect a massive rise. If this was true, however, it would take years of analysis to confirm. It takes something big and unexpected to move mortgage rates, something like our current president. The administration is moving in an upward spike when it comes to rates and prospective home buyers should take note.
So, although that three day win in the rates felt good it is going to take a lot longer than three days to get some real change in the upward movement of the market. Lenders should keep an eye on the bond market while potential home buyers should continue watching what is happening in the white house before moving in on that dream home.