Mortgage Rates have stabilized this week after moving & testing higher on the first 2 days of the week. Rates managed to improve modestly despite some volatility surrounding a scheduled auction of 30yr Treasury bonds on Thursday. Mortgage rates are based primarily on mortgage-backed-securities or MBS (bonds that tend to correlate with US Treasuries). As such, drama in Treasuries often spills over to mortgage rates.
Fortunately, Treasury traders were able to take today’s weak auction results in stride. The bond market weakened temporarily, but quickly returned to the slightly stronger levels from morning hours. This allowed mortgage lenders to hold rate sheets steady at slightly lower levels than yesterday.
Either way, the movement is small, and the average borrower will be seeing the same “note rate” then or now. The difference in rates comes down to the upfront costs. These affect the “effective rate” by making the overall cost of financing slightly higher.
Bottom Line: Due to market volatility and Fed Tapering, I am recommending client LOCK when escrow opens.