Mortgage rates are priced slightly better than yesterday.
We’ve had quite a run in mortgage rates over the past couple months. Since the beginning of April mortgage-backed-bond (MBS) prices have rallied by over 500 basis points and the 30 year fixed “par” rate has declined by .75%. Whenever we see an unprecedented run like this we begin to get worried about a trend reversal.
Over that time optimism about the trajectory of the economic recovery has turned to pessimism. In yesterday’s Fed statement the tone of their comments were much more cautious than they were a couple months ago.
The US is not in isolation in this regard. In Japan the yield on their 10-year note feel to a 10-year low today. When the outlook for the economy is down, investors shift their investments away from riskier equity positions into relatively “safe” fixed income securities. This is the definition of a “flight-to-quality” trade and that is why yields are so low.
Locking is still a fairly safe play.
Current outlook: locking bias