This week began in slow fashion as there were next to no scheduled economic reports that affected mortgage rates.  When data is in short supply, traders turn to the stock market to get clues about how to invest in MBS.  Stocks have had some ups and downs this week, but are generally even with the end of last week.  As a result, MBS are even as well.

The activity level picks up today with more economic reports already released and set to release.  however, these reports have had mixed signals for mortgage rates.  Concomitantly, the Dow is just about dead even on the day, currently down 8 points.  So here we are, yet again with rates holding steady.  The question is not so much about whether or not rates are good (because they are historically low), but is more about whether rates will move up or down.  one thing is for sure, when we have held these steady levels for so long, we know we will see movement soon.

Whether or not that movement will come today is anyone's guess.  The ingredients are in place for a rate improvement later today.  It's always a risky bet to float your rate when rates are historically low, but if you choose to do so, you may be able to snag a slightly lower cost for your interest rate.  For instance, a moderate improvement in the mortgage rate market today could lead to your closing costs decreasing by .125-.25% of your loan amount.  We ARE NOT talking about .125-.25% change in interest rates.  The mortgage market would have to have an amazing day for that to occur.  More often the movements we see simply affect the COST of the rate as opposed to the rate itself.  by the time we see a change of .375-.625% in cost, we begin to see our first .125% change in rate.

Though the bonds that dictate mortgage pricing are distinctly different from US treasuries, they do move in the same direction most of the time.  With limited data set to release for the rest of the day, the stock market and the treasuries will be a decent indication of whether or not you should lock.  If you see stocks or treasury bond rates shoot up (just watch the 10 year note), you will then want to immediately check the "professional blog" on this site to see if there is an update.  if there is not, locking  is the way to go.  Remember that lenders can reprice numerous time per day, and are fast to do so, though not faster than I can see these changes coming.  Nonetheless, if yields on bonds rise by a few ticks, you only have a window of about 20 minutes before the fastest lenders will begin repricing for the worse, so you must be vigilant if you will float.

As far as the medium term, though rates are low, I believe they have room to come down.  Recently we've gotten better than expected economic data and the markets are adopting the perception that we will avoid a recession.  This would indicate that rates will not get any lower.  however, if you agree with me that the market will be down again soon, and that this recent optimism is just a "latching on" to much needed positive data, then floating has the potential to net you some small gains if we do indeed decline again.  I wish I could give you a "crystal ball" prediction, but that is impossible.  So I present you with the relevant considerations and advise you to trust your experience and "gut" from there.  Just because my gut tells me we will move lower soon doesn't guarantee it.  If I am too pessimistic on the market outlook, my thoughts will be rendered invalid if the market ends up improving.

So as is the answer to so many of life's questions, go with your gut.  Good Morning and Good Luck.