Mortgage bond prices finished the week near unchanged which kept rates basically flat. Rates improved Monday morning as news out of the Eurozone focused on Deutsche Bank and legal proceedings with the U.S. government. There was flight to safety buying of U.S. debt instruments as a result. That unwound a bit toward the end of the week as news reported a possible settlement that would reduce the payment from $14B to around $5.4B. The data was mixed. Final GDP rose 1.4% in the 2nd quarter versus an expected reading of 1.3%. Weekly jobless claims were better than expected. Personal income rose 0.2% as expected. Spending was unchanged versus the expected 0.2% increase. PCE Core inflation was up 0.2% as expected. Mortgage interest rates finished the week with no real discount point changes.
A Sure Thing
While nobody can accurately predict what the future holds for mortgage interest rates, the fact remains that they are historically low despite volatility this year. It is difficult to justify the risk in floating when the excellent rates currently available are a sure thing.
Timing is one of the most important factors in success. Unfortunately, knowing the perfect time to lock in a loan is impossible until after the fact. While analysts constantly try to predict the future, the bottom line is they continually fall short in terms of accuracy. Recent history is a testament to this. Fed officials started saber rattling about a rate hike in the early spring only to be surprised by weak jobs data in May and the Brexit vote that followed shortly after that. Now some Fed members are talking about a rate hike in the months ahead. Rates are historically very low at this point. The movements over the past 9 months show the challenge of making predictions. The good news is that the current low interest rates are here now. A cautious approach is wise to take advantage of rates at these levels.