Mortgage Insights

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US Mortgage Rates Stable to Somewhat Higher on Monday

Dec 5, 2017

US mortgage rates were all over the place on Monday, with some mortgage providers issuing higher rate sheets and the rest remaining unchanged.

The is directly related to Friday’s hectic activity in bond markets after the Russia/Flynn news broke early in the day. That activity caused more than one lender to issue lower rate sheets before the close of trading on Friday.

The credit providers that did lower their rates on Friday afternoon had to return to their previous rates yesterday since the bond markets underlying rate movements could not sustain the improvements that caused them to issue lower rate sheets. Those mortgage lenders that did not reduce their rates on Friday were in a good position yesterday to keep their rate sheets unchanged.

When it comes to the factors that underpinned the pull-back in bond prices, the Senate’s approval of the tax bill most likely played a major role in pushing rates higher. That was definitely a big factor early yesterday morning, but bonds managed to recover the biggest chunk of their losses before the end of trading yesterday afternoon.

Taking all that into account, the bond market justifies somewhat better mortgage rates than what the market saw yesterday afternoon. The tricky part is that volatility will remain a factor throughout this week.

If bond markets remain unchanged today, rates should theoretically improve. However, there is no way to be sure where bonds prices will stand by the time mortgage providers issue their rate sheets today.

Mortgage expert Ted Rood pointed out that Monday was a fairly quiet day in rate markets, with the finer details of the tax reforms slowly reaching the media. He added that the reforms would likely be approved and that bond prices have already accounted for that likelihood.

Rood continued: “We'll need drama/uncertainty to spark demand of bonds and lower rates, the question is where (DC drama/overseas conflict?) and when it'll arise. I'm in ‘lock early’ mode for borrowers within 30 days of closing.”

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