Mortgage Bonds Continue to Improve

Stocks have shown increased volatility in recent days.  However, mortgage bonds have seemed to be disconnected from the moves.  Generally, we would see mortgage rates increase as the stock market climbs, then soften as the market falls.  However, mortgage bonds have consistently improved in recent days, regardless of the direction of stocks.  I believe that the bond market is a much better reflection of true market sentiment and that stock investors chase returns regardless of the longer term economic outlook.  With that said, we are very lucky to have multi-year mortgage interest rates at the same time as record high stock prices and a 50 year low unemployment rate.

It is another quiet economic news day, so the technical picture will heavily influence the markets.  With mortgage bonds showing strong technical signals, this is good news for mortgage interest rates.  However, there is another strong ceiling of resistance just above current levels.  Therefore, I believe that significant gains from this point will not be likely today.  I believe the market will need some type of tailwind if bonds are to break above.  That could come from next week’s scheduled economic reports or possibly a significant downturn in the stock market.  Since neither are guaranteed, we should be grateful for the interest rates available to us now and consider locking.

Although there is no reason to immediately rush to lock, further rate improvements will be limited.  Consider locking in today’s low rates.