Mortgage rates unsure what to do (as is the rest of the market)
Good morning AR members and readers, today I am going to go into a small explanation of why the market is behaving this way (backwards).
First let me start of with the data so you can follow a little better.
Here is the news that is driving the markets this morning...
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Case Shiller 20-city Index: Actual -4.0%, prior -3.61%, consensus -3.9% Consumer Confidence: Actual 58.5, prior 60.8, consensus 60.7 Treasury to auction $35B 5-yr notes later today |
OK here is the rest of the story. The market has been showing very strong resistance when trying to break over the 101.5 level on the FNMA 4.0 coupon. Correspondingly it has also shown resistance, albeit less, for the 10Y to fall below 3.0Y (which it still is slightly below that mark) against data that reflect otherwise and should bring in more money into the safe haven of security. (Treasuries and bonds)
I believe this is due to the fact the buyers/investors definitely want security, in this crazy market, but the returns they are getting are levels so low they are incentivised to go into riskier equities (as tying up your money for 10 years to get a yield of 2.95% isn't all that appealing and doesn't even keep pace with inflation).
So while I rant every now and then when the markets dont behave the way data and techincals reflect they should, that is the underlying core and it is legitimate.
Consumer confidence is down(which should have helped rates but it didn't) but pushing against that is yesterdays 2 yr auction which went off with little demand. Today we have 35B of 5yr notes going off and if as poor as yesterdays 2yr we could see more sell off.
Unlike many others I do not think rates are going to continue to fall. I admit I did believe that, even as recent as last week, but after seeing a 4th time of trying to hit and blow through the 101.5 level on the (FNMA 4.0) and seeing it stop and then retrace I just believe we are about as low as rates are going to be, barring any catastrophic event and even then lower rates will be very short lived.
In summation: Rates likely at bottom, market still highly unpredictable, Greece is still playing a role in the US markets, consumer confidence is very low and what does it all mean... lots of uncertainty and lots of questions marks in the near future.
I still believe the time is NOW to buy a home or go into property investing (or deeper if already in). 50yr affordability all time highs from good income levels, low home prices and very low rates drive this index to this 50y mark. By taking advantage of this and doing the opposite of the masses will reap rewards. If you are looking to buy a home in Colorado, want information on property investing or simply want to improve the loan you currently have feel free to call or email me.
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