Mortgage bonds remain trading within a defined range. However, the trend is clearly for mortgage interest rates to continue to improve. A look at the charts show that the last time mortgage rates were at current levels was just shy of 2 years ago. This is a level that provided stability for mortgage rates. Hopefully, we will see rates take hold near this level and allow some time before making a move one way or the other. Since rates are already near all-time lows, we know there is more room for rates to rise than there is for rates to fall. So, keep that in mind when deciding whether to lock in or float.
Stock prices are slightly higher on the day. However, they are forming a technical picture that predicts a pull back. Not to say that this is the big one that I anticipate coming. This could be just a short-term fall that will not be too dramatic. When stocks do fall, that generally helps support mortgage bonds. This could be helpful in providing stability for mortgage rates.
A battle with Iran continues to heat up, which will certainly cause instability for financial markets if it goes too far. The bad news for mortgage interest rates is that this is happening in one of the world’s oil supply locations (shocking…..). This could cause oil prices to rise, which is an inflationary move. So, we need to keep a close eye on the relationship between the US and Iran and monitor the impacts further escalations would have.
There is no need to immediately rush to lock. However, be aware that a pullback is overdue. So be prepared to lock.