Rates are slightly higher this morning following a significant sell-off in mortgage-backed bonds yesterday.
As we had mentioned in yesterday’s rate update in the absence of significant economic data mortgage rates would react to oil prices, the stock market, and technical trading patterns. It was the latter two factors which pressured rates higher yesterday.
Today we find ourselves in a similar position. In the absence of significant economic data it will be the stock market and technical trading patterns that will determine the direction of mortgage rates.
Currently stocks are trading lower in response to renewed credit fears in the financial sector. This should benefit mortgage rates. For now we will shift our outlook to neutral with a floating bias. There is plenty of volatility so borrowers should be prepared to lock.