Mortgage bond prices are falling, and stocks are heading higher in early morning trading. This follows a statement made by Treasury Secretary Mnuchin in a CNBC interview where he said that the U.S. and China are 90% of the way there to a trade deal. However, we must keep in mind that we have heard this before just to learn that talks are on the verge of falling apart. This will provide some temporary relief for the stock market and will help short term traders pocket some profits. Sometimes I can’t help but wonder if statements are made to help boost stock prices when the Trump administration starts to feel a stronger market pullback. I may be a bit of a conspiracy theorist. However, that’s the way my mind works.
Mortgage applications for last week were released this morning, and once again applications to purchase a home were lower. The purchase application trend continues to fall, as homebuyer activity clearly is slowing. There is a point at which people will realize that the housing market is not going to be nearly as strong going forward. This will continue to take its toll on home value appreciation rates, which are influenced by supply and demand.
We continue to see risk in floating. We suggest locking in the short term and floating in the long term.