Last quote by Matthew Graham
Matthew Graham quotes
Even I was surprised to see how quickly lenders pulled back today. Different lenders have moved by different amounts, but on average, the 2 day total is 0.25 percent!
The average lender is quoting conventional 30-year-fixed rates of 3.625 percent on top tier scenarios, though several remain at 3.5 percent.
But that would be a premature conclusion until we see how markets react to Thursday's announcement from the European Central Bank. Bottom line, the past few days have been helpful, but everything could still change.
Floating is risky here. Even though today's rates are closer to the highest levels of the past two months, they're still historically close to all-time lows.
We were left to wonder if this was the first step in a move up and out of the recent sideways range.
This gives investors a chance to examine the Fed's discussion leading up to the late July policy announcement in greater detail. At the moment, everyone is looking for clues about the Fed's thoughts on hiking rates at the September or December meeting. If the minutes make it seem like September is more likely, rates could easily continue higher.
With 10yr yields ending the day near 1.55 percent, rates are essentially threatening to move higher. The next three days bring a series of important economic reports that could act as motivation for such a move, if they turn out to be stronger than expected.
Everyone with a potential loan in process wants to know if rates will drop further or if they should lock to avoid the risk of rates snapping back.
That could change though. One of the reasons rates haven't been more volatile is the fact that the Brexit vote is seen as being fairly even. As soon as a clear victor emerges, rates could move swiftly. A 'remain' vote could cause a much quicker move higher in rates on Friday morning.
If we'd lost ground, it would have confirmed a negative signal about momentum in the short to medium term. Now we have a fighting chance to see if momentum can build in a friendlier direction.
I'm getting a lot of reports from lenders about their clients who missed opportunities to lock in mid to late February, and who finally saw rates move low enough to pull the trigger. The current week is still up in the air, but rates had been holding their ground through Tuesday, despite some ominous weakness in underlying bond markets.
Someone might see the average closing time go from 46 to 49 days and assume that's not significant, but when you look at the amount of homes that close in a three-day time span on average (not to mention some additional unmeasured delays occurring before the loan application is taken), we can almost fully account for the massive drop in existing home sales in November.
Bond markets continue defying the odds so far in 2016.
Given the Fed rate hike and strong ADP data yesterday – among other reasonably decent economic anecdotes – we would be more justified in expecting bonds to be under pressure at the start of the year.