Mortgage Rate Update July 8, 2013

I certainly don’t get it right every week but I have to give myself a pat on the back for my ‘rate update’ last Monday in which I wrote, “we may see a large swing in interest rate pricing on Friday because there is expected to be fewer participants in the marketplace due to the 4th of July holiday falling on Thursday…  Anytime there are fewer buyers and sellers in a marketplace it is a recipe for volatility…Since rates have improved since last Thursday I am going to recommend a locking stance.”

My comments proved correct as 30-year fixed mortgage rates rose by .50% on Friday following the release of another better than expected all-important jobs report.  Friday’s rise in rates marks the largest one-day increase in recorded history.

As is often the case whenever the market moves sharply rates have recovered ~.125% today.  Will they continue to improve off these levels?

Two stories I’m following could help rates move lower.  First, political upheaval in Egypt has some analysts concerned about the stability of the region.  Second, the Portuguese government, which has been successful in implementing austerity measures, may fall apart following the resignation of two important ministers.  Some analysts believe this could reignite the Euro debt crisis.  Either way, geopolitical uncertainty generally helps rates remain low.

I’m not confident that these stories will be able to overcome the momentum of the market.  On Wednesday we’ll get the release of minutes from the last Fed meeting and Chairman Ben Bernanke is scheduled to speak.  As the saying goes, ‘Don’t Fight the Fed’.  I would recommend floating into Tuesday but locking thereafter.

Current Outlook: lock after Tuesday this week