Market on the Hump - 3/25/15
Up, up, DOWN. I've said it before, and I'll say it again until it's no longer true. Rates go up faster than they go down. We saw it again as rates improved over the past 2 weeks, to the point where we're once again near 
historic lows. The week started off fantastic with 2 straight days of gains, before today erased the week's early gains. Bright side? Oh yeah, we've got one of those.
RATES ARE CRAZY GOOD RIGHT NOW!
The most popular move I'm seeing on current applications, aside from making the very wise decision of buying a home, is a refinance to reduce loan terms from 30 years to 20 or 15 year terms. There are also people ditching their FHA loans from last year and jumping into conventional loans with LPMI or PMI they can actually get rid of once they accrue additional equity. Again, good moves to make while rates are this low.
Monday opened up as a relatively quiet day, and we enjoyed some market gains that seemed to be residual from last week, in additional to remaining calm ahead of the CPI (inflation) report that was due out Tuesday. Since inflation is the enemy of mortgage rates, these reports are important to keep an eye on.
Tuesday brought in good news on the inflation front (still well below the Fed's 2% target rate), and shrugged off positive housing news (if that trend continued - positive housing numbers and bond friendly movement, we'd all be doing very, very well) and rates continued to drop.
Today, there was a reversal, and it started off ominously, as the day before the market shrugged off good economic news, the market today shrugged off a terrible durable goods report. A miserable treasury auction and comments by a Fed chair about potential rate hikes in late summer caused a reversal and the market lost all it's steam from earlier in the week.
Going forward, it will be interesting to see what will happen - will the market continue to push rates down on the heels of a dragging economy, or will traders consider the trend of over the past 2 weeks to be overbought and sell some bonds off over the coming days? There are 3 reports to keep an eye on going into the end of the week- jobless claims, due tomorrow, and both a consumer sentiment report and a GDP report on Friday which could be a major market mover. Hopes are that these reports will be in line or worse than expectations, which would likely trend rates downward.
I think the long term outlook should be rates moving down slightly from current levels, but short term movements will be largely driven by the next couple of days economic reports. As sad as it sounds to say, I hope the economic reports are dreary, as consumers could use a few more weeks near historic lows on our rate sheets.
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