Market Comment Mortgage bond prices finished the week higher, which pushed rates lower. Prices improved Monday morning in response to weaker than expected existing home sales. Existing home sales printed at 5.05M. Traders expected sales at 5.2M units. Higher than expected new home sales data Wednesday tempered some of the earlier gains. New home sales printed at 504K. Traders expected sales to print at 435K. Durable goods orders fell 18.2%. That data was near expectations as the prior month saw a huge increase. Weekly jobless claims printed at 293K versus the expected 300K mark. The US economy expanded at a 4.6% rate in the second quarter as expected. This followed a contraction of 2.9% in Q1 2014. Mortgage interest rates finished the week better by approximately 3/8 of a discount point. LOOKING AHEAD
A Sure Thing While nobody can accurately predict what the future holds for mortgage interest rates, the fact remains that they are historically low despite volatility the past months. It is difficult to justify the risk in floating when the excellent rates currently available are a sure thing. Timing is one of the most important factors in success. Unfortunately, knowing the perfect time to lock in a loan is impossible until after the fact. While analysts constantly try to predict the future, the bottom line is they continually fall short in terms of accuracy. Recent history is a testament to this. At the beginning of the year analysts overwhelming predicted higher rates in response to the Fed’s tapering of MBS purchases. Rates fell in January, rose in the spring, and then fell again in the summer despite the Fed purchase reduction. Rates recently spiked higher near the end of summer but still remain historically low. The movements over the past 9 months show the challenge of making predictions. The good news is that the current low interest rates are here now. A cautious approach is wise to take advantage of rates at these levels. |
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