Be ready to pull the trigger

Mortgage bonds continue to trend higher, helping support downward pressure on mortgage interest rates.  Bonds will face a 10 Year Treasury Note auction later this afternoon.  The appetite investors show up to the auction with could influence the near term direction of mortgage bonds.  If demand is strong, that could help push the 10 YTN yield below its 25 day moving average.  That would give the 10 YTN yield room to fall even lower, possibly allowing them to fall back to the lows they hit back in early July.  Regardless, yields on the 10 YTN are still matching 4 nearly 4 year lows.  Although not directly tied to mortgage interest rates, they tend to move in the same direction over time. 

Housing continues to show strong numbers, with Zillow being the most recent to make bullish predictions on the future value of our housing market.  In their Home Price Expectations Survey for the 3^rd quarter of 2016, Zillow showed that the average expected rate of appreciation over the next year is 4.5%, with a 5-year appreciation growth of nearly 20%.  Because appreciation rates vary from city to city across the country, we have individual reports that outline appreciation rates for specific areas.  Feel free to reach out to us to request an update on any market that you are interested in.

We would like to try floating into this afternoon’s 10 YTN auction.  However, we must be ready to lock if the results show an unfavorable turnout.  Therefore, if you choose to float, watch the markets closely and be prepared to pull the trigger.