Mortgage Rate Update April 20, 2015

Mortgage rates continue on a sideways path with no meaningful movement up or down.  Might we see some volatility this week?  The economic calendar is very light.  The only meaningful data scheduled for release this week is existing home sales (Wednesday), new home sale (Thursday), and durable goods (Friday).

In the absence of significant readings on the economy mortgage rates are likely to react to technical trading patterns and the stock market.

From a technical perspective mortgage-backed bonds (MBS’s) have traded within a fairly narrow range since April 1st.  Anytime we see prolonged periods of time where MBS’s trade within a tight trading range it increases the risk for “breakout” where interest rates react quickly for better or worse.

A look at the yield on the US 10-year treasury note may offer clues.  In the past 5 weeks the yield on the US 10-year treasury note has made three attempts at moving below 1.85%.  Thus far none of these have proved successful.  It looks like they are gearing up for another attempt.  Should yields break below this level we would expect them to touch 1.78% which may squeeze an additional .125% improvement for mortgage rates.

4-20-15 10yr


For now, we’ll float to see if rates can move a bit lower.  Should he yield on the US 10-year treasury note reverse higher I will shift to a locking position.

Current Outlook: floating