Mortgage bonds bounced off of a duel layer of support, which put a halt to the downward channel that pushed the APR of mortgage interest rates higher the past couple of weeks. At the same time, stocks have continued to show signs of weakness and are contributing to a buildup of strength in the mortgage bond market. With a great deal of room to the upside, this momentum could drive bond prices higher in the coming days. Although it’s too early to call the bottom, there is a chance that bonds could have hit the low points we will see in the near term. If that is the case, mortgage interest rates could see a small drop.
New Housing Starts in the month of June totaled a 1.189 million units pace, representing a rise of 4.8% from last month. This impressive report was stronger than expectations of 1.17 million and was the best number reported in four months. Today’s report points to a new construction market that continues to move at a strong but steady pace. This pace is somewhat of a Goldilocks scenario, where it is not too hot, not too cold, but just right! Many experts feel this pace is sustainable for at least the medium term without creating an abundance of supply. With the current state of low mortgage interest rates, our housing market is certainly in a great position for the time being.
With mortgage bonds attempting to stabilize at current levels, there is no immediate need to rush in to lock at the moment. However, if you choose to float, do so carefully. Markets can change quickly and tomorrow can be a very different story.