Secure your rate

Bonds carried out the plan we discussed yesterday, with the 10 Year Treasury Note yield falling beneath 2%.  This has helped pushed mortgage bond prices higher, which is pressuring mortgage interest rates lower once again.  However, we are now in unchartered waters, or at least an area that we haven’t seen since about April of 2013.  Therefore, to determine where we will find resistance we must look back over 20 months in the past.  With the longer term view we see that we are now at the top of a channel.  This increases the risk that we will have at least a short term pull back in pricing, meaning that now may be as good as it will get in the very near term.

Tomorrow we will get the first of three significant readings on the job market, when ADP announces their estimate of job gains for the month of December.  Although Friday’s reading from the Bureau of Labor Statistics is more of a market mover, ADP will at least give the market a glimpse of what we may see on Friday.  If job growth is stronger than expected, mortgage rates will likely suffer.  However, if the report shows more weakness, that could help bolster continued improvements to mortgage interest rates.

With bonds still performing strong, it is difficult to suggest locking.  However, when we see a gap higher at the opening of the bond market there is a strong chance of a correction coming soon.  With that in mind, the safe play will be to lock.  Also, job reporting weeks also tend to be extremely volatile in the markets.  The only way to avoid the downside risk will be to secure a rate while they are at 20 month lows.  Having interest rates this low is a blessing and not something that should be gambled.