Mortgage rates are mostly unchanged to start the week. In case you didn’t catch it, the financial markets were closed yesterday in recognition of President’s Day which is why ‘rate update’ is being published on a Tuesday.
Is the economic recovery waning? Or is the arctic weather around much of the country having a temporary impact on economic activity?
That is the million billion trillion dollar question on Wall Street.
The National Association of Home Builders released figures for its monthly builder confidence index and it fell sharply. Builders blamed cold weather as well as a shortage of build-able land and available sub-contractors. In a separate report, the Federal Reserve Bank of New York released figures that showed manufacturing activity in the New York region fell by more than expected. Bad news for the economy tends to be good news for mortgage rates.
It may take some time to for the true answer to reveal itself but if the economic recovery is waning then we would expect mortgage rates to remain near current levels for a prolonged period. However, if economic activity picks up once the winter weather has cleared then rates will likely rise.
From a technical perspective mortgage-backed bonds (MBS’s) are trading right below the 200-day moving average. If MBS prices can poke through this level we may see rates improve another .125%. However, should they get pushed lower, like they did in mid-December I foresee rates rising by .125%-.25%.
I anticipate being in a locking position for most of the year (since I expect rates to rise) and will remain in that position today.
Current Outlook: locking