Yesterday’s early morning stock market rally ended as the day wore on, with stocks closing down for the day. Mortgage bond prices also fell in late day trading, closing the gap we talked about in yesterday’s market update. Bonds opened up weaker this morning under pressure of the stock market climbing higher. The trend of higher rates and higher stock prices will likely continue in the near term. This will add a bit of pressure to the housing market as we head into the stronger summer home buying market.
One of the primary drivers of higher interest rates is the Federal Reserve and their plan to cut back on reinvestments into mortgage backed securities. The plan calls for purchases to progressively decrease as the months progress. As fewer bonds are purchased, mortgage interest rates will continue to be pressured higher. Although rates will still remain low, we can plan for them to move higher than they are now.
The upward pressure remains in mortgage interest rates. We will maintain our locking bias.