Daily Commentary

OVERVIEW:

Rates are hitting the high side of the range, and pricing today likely worse than yesterday as bonds continue to slide. It’s been over a week since we’ve had a good day in bonds, and the fear is likely setting in. Hold strong though, don’t panic, loans with time will likely see improvement. The question mark is Friday, and what happens with the PCE inflation data and what Fed Chair Jerome Powell will say from Jackson Hole. If that goes our way improvement will come sooner, if not though it could get worse before it gets better. I know it sounds risky, but I’m still advising to float through this until we see the rebound, especially for loans with lots of time before closing.

YESTERDAY:

Yesterday saw bonds worsen through the day, and a handful of lenders did reprice worse.

TODAY:

Bonds off to a weak start, leaving rate sheets to struggle. Reprice risk on the day is moderate, but I’m hoping we actually see improvement on the day.

TECHNICALS:

The UMBS 4.5 coupon (MBS or mortgage backed securities) at 99.78, down -17bps on the day and about -30bps from yesterday when pricing came out. MBS ended yesterday at 99.97, above the 99.90 mark in the sand I talked about. Today MBS are below that support level, but I’m hoping we see a recovery and end at or above it again. If not, the door will be open for a continued slide for bonds.

The 10yr Treasury yield at 3.04, and we want to see it hold at 3.03 today.

LOCK ADVICE:

Loans closing in less than 15 days should cautiously float. I hate the idea of locking a loan at this pricing, but loans closing soon that didn’t lock on the way here will be faced with a choice. I’d at least wait to see if we get a bounce this week, but don’t look for rates to improve much ahead of Friday and then it will be reactionary to the PCE inflation data and Powell’s comments.

Loans closing in 15-30 days should cautiously float. If Friday doesn’t bury us, we should see rates improve over the coming weeks. However, if Friday works against us, then it could get worse before we see better again. Loans willing to gamble could improve from here, but loans that don’t want to risk it are going to lock what’s on the rate sheet for peace of mind.

Loans closing in 30+ days should float. I’m not crazy, we will definitely see rates come down again… but the question is when. That will depend on this Friday’s data and Powell’s comments, as well as next week’s jobs data. Contact Introlend Arizona if you’re interested in getting prequalified for a mortgage.