When economic data is thin the stock market tends to have a larger impact on the direction of mortgage rates.
The session began with stocks moving lower yesterday. With no data on the economic calendar to reverse the market's direction, the bond market was able to rally all day (higher bond prices = lower bond yields). This allowed most lenders to reprice for the better. Like yesterday, the economic economic was quiet today. Two events influenced the marketplace...
The Department of Treasury auctioned $21 billion 10-year notes today. Before the auction, the bond market made room for new debt supply by letting Treasury prices fall (cheapen). This pushed benchmark yields higher and led MBS prices lower. The issue must have gotten cheap enough because auction demand was strong. This led to a modest post auction bond market rally, but that didn't last too long. Positive bond price appreciations failed to hold steady after the Beige Book was released at 2pm.
HERE is a recap of the 10-year Treasury note auction
HERE is a recap of the Beige Book
Because stocks were already in rally mode when the day began, and because stocks stayed in rally mode for most of the day, the small recovery rally seen in MBS prices following the 10-year Treasury note auction did little to inspire lenders to reprice for the better. Although lender rate sheets are improved vs. rebate yesterday morning, they are slightly worse than the pricing offered by lenders yesterday afternoon, after reprices for the better.
The par 30 year conventional rate mortgage remains in the 4.25% to 4.50% range with a few more lenders offering 4.125%. If you are seeking a 15 year term, you should expect a par interest rate in the 3.75% to 4.00% range. To secure a par interest rate, you must be willing to pay all the closing costs associated with your loan including one point loan origination/discount/broker fee.
I continue to favor and advise all clients closing in the short term to be locking. Longer term closings should also consider locking as MBS are once again close to all-time price highs. We've lived by this creedo all year: Lock at the price highs, float at the price lows. If you wish to gamble, keep an eye on the stock market. If stocks move higher, MBS prices will fall and mortgage rates will suffer.