Mortgage Rate Recap from Last Week
Last week saw rates go up slightly, an average of .125%-.250%, as the MBS (Mortgage Backed Securities) were trading very tightly within a well defined range but lost 69 basis points (ouch).
One reason was the lack of economic reports that would normally move the markets, most notably the jobs reports that were missed on Friday. This economic data was not released due to the government shutdown closing the departments that do the reporting which causes investors to speculate.
BEWARE: this is a false stability that will likely end this week with the break in the logjam of Washington D.C. talks regarding the debt ceiling and government shutdown.
Mortgage Rates Forecast October 15-18, 2013: NEUTRAL, but high threat of volatility
This week will again show the calm before the storm, as the markets hold their breath for the next move. Also keeping the markets stable is all the economic reports that are scheduled for release this week will not be released due tot he government shut down.
Expect traders to start getting nervous as we move closer to reaching our debt ceiling, and Congress continues to play with fire. The markets have remained calm up to this point, but expect tensions to continue to rise as the deadline draws near.
As the tensions rise, this may play out well for mortgage rates as traders continue a flight to safety in bonds, and improve the pricing of Mortgage Backed Securities. However it also could break the other way and we could see a dramatic turn in pricing, so be very careful.
Should You LOCK or FLOAT Your Rate?
BOTTOM LINE: There is risk to floating right now, but also potential reward. However, once news breaks that the shutdown is no longer an issue and the debt ceiling is being dealt with, be prepared to act quickly.
Whether it’s a purchase or refinance, it’s critical you’re Loan Officer is tracking live trading data, understands all the variables that cause rate volatility, and experienced enough to navigate you through the often times stressful and confusing process of staying one step ahead of lender re-pricing for the worse or better and lock your rate.