RateWatch Feb 24 – Still in Kansas

Since I started this RateWatch we have had gigantic levels of volatility in the bond markets.  Of the 20 most-volatile trading days in history, 16 of them are in the last two years.  It’s like coming through the Rockies on the I-70, up and down and up and down and up and down all the way through western Colorado.  And then, as if by magic, it all goes away and before you is Kansas.  Not a hill to be seen for 400 miles.
This appears to be the area we have entered, market-wise.  [Technical Analysis Alert: skip this paragraph if you're just browsing]  For illustration, I have an automatic alert on my phone and my email if the FNMA 4.5% coupon changes more than 15 bps from the time lenders send out pricing.  At one stretch, I got an alert 23 days in a row (this fall).  Over the last two years, there has not been one stretch of 5 days without an alert.  Then there was one in January.  We are, as of today, on a stretch with just 3 alerts in 16 days.  Mortgage-backed securities have not deviated more than 50 bps (usually corresponds to .3/.4% to the pricing, or about .125% on rates for mortgages) from the January 29 close.
In one sense that’s really nice, because it means that I don’t have meetings interrupted by the necessity of flying back to the office to lock a batch of leans before we lose the pricing we need.  On the other hand, many of you are waiting for that trophy rate of 4.875%, and we just don’t quite have it.  Bonds are teasing us.  Doing it again today.
A break will come, my friends, one way or the other, and when it does, we’ll have very little time to react.  Are you ready?  Do you have your information to us so that the minute things go the way you need them to, you can take advantage? It only takes a minute, and it could save you thousands.
5% today on some FHA, and some very specific conventional loans.  More likely you’re looking at 5.25%.
Cj
Chris Jones
Branch Manager
City 1st Mortgage Services

801-310-3407

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