Friday Market Wrap 3/20/15
Following my hump day udpate a few days back, rates responded in a way that didn't surprise anyone too much - despite economic data that should/could have reduced rates further, traders pulled back and sold MBS 
Thursday, showing the sentiment for Wednesday, although good, was a bit too exuberant.
Today, thankfully we recovered some of what was lost yesterday, and over the past 2 weeks we recovered much of what was lost in the 2 preceding weeks.
Rates are very, very attractive right now, once again approaching the all time low level that we've approached a few times before. It's important to keep in mind that each time we approached this level in the past, rates quickly spiked shortly after. Short term, this makes it a great idea to lock in the recent gains and enjoy a ridiculously low rate.
For the week, economic news floundered. Even with losses in the mortgage backed securities market yesterday, the Philly Fed, a manufacturing report, came in pretty pitiful, and other economic data did no better than matching expectations. Oil, which has had some impact in our markets (and has done pretty well coinciding with the rate of interest rates in recent weeks) and once again plummeted. Enjoy those prices at the gas pumps while they last folks (spoiler alert: It won't last).
Next week will be an interesting one. Perhaps the most important economic event of the week will be the CPI reading (a report on inflation of consumer goods). Inflation is the enemy of low mortgage rates, and the complete lack of inflation of the past year has been one of the biggest reasons rates have been able to remain low, and the Fed hasn't had to increase their funds rate early (raising the Fed rate is the main weapon in keeping rising inflation in check). If there are no worries about inflation, treasury auctions go ok, and (especially) if Q4 GDP is revised downward, rates have a good chance to go even lower next week. BUT (there's always a but), if any of these events don't go well, traders could consider MBS (mortgage backed securities) as overbought, and sell, causing rates to increase quickly.
Long term, I think there's room for rates to go lower (I had a kidding/not kidding moment yesterday when I told a friend that we're just about 1 war short of rates in the 2's), but short term the market is still subject to quick and large spikes, so my advice is to lock in and be thankful you caught rates where you did. If you know anyone that could benefit from a refinance (which is basically anyone with a rate higher than 4.375% OR anyone carrying PMI), have them call me...or your favorite lender...but hopefully that's me, too ; )
Have a great weekend everyone!
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