Mortgage Interest Rates Slightly Improve Post Fed Meeting

Per MND:

Mortgage rates had a wild ride today. Underlying bond markets were significantly weaker leading up to the afternoon’s Fed events. During this time, many lenders sent out reprices with higher rates compared to yesterday’s latest. After the Fed Announcement was released (along with the updated forecasts from Fed members on where they saw rates over time), bond markets bounced back in a big way. At that point, lenders began repricing in the other direction, ultimately bringing average rates below yesterday’s latest levels. By the end of the day, several lenders were quoting 4.0% on top tier conventional 30yr fixed scenarios for the first time since June 4th. That said, the average lender remains at 4.125%, but with lower closing costs than yesterday.

The big question is whether this afternoon’s strength or this morning’s weakness is the more telling move. Are rates more interested in going higher or lower? Did the Fed change anything? This is a particularly tough call this time around for two reasons. Normally, if there’s a big move on a Fed day, that suggests lasting momentum. Unfortunately, today’s big move went in both directions, so which one is telling the truth? The other complicating factor is Europe, which has been doing as much as anything to push rates higher in May and June. The bottom line is that we’re in substantially similar territory to yesterday afternoon. The game-plan is to remain defensive until the longer term trend definitively changes, and today wasn’t enough to accomplish that. Floating is still dangerous until it’s not anymore.

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