Mortgage rates are unchanged this morning.
In Tuesday’s ‘rate update’ we mentioned the unorthodox technical trading patterns that the mortgage-backed bond (MBS) market was experiencing. Today marks 13th day that MBS prices have traded at or near the 200-day moving average price line. This is unprecedented. A look at the bond chart below shows bond prices over the previous 90 days.
The first box shows MBS prices moving sharply away from the 200-day moving average (October 2008). The second box shows MBS prices hovering around the 200-day moving average.
Unfortunately it looks as if MBS prices are poised to move lower which would push rates lower in the near term. However, in the long-run we believe that deflationary pressures could push mortgage rates lower.
Current outlook: Locking in near-term/ floating in long-term