If you checked the financial news earlier this week, you likely saw red. Mortgage-backed securities (MBS)—the bonds that largely determine mortgage rates—had a difficult three-day stretch. When MBS prices go down, mortgage rates go up.
It is natural to see this and worry that the recent trend of improving rates is over. However, looking at the market activity today, the data suggests otherwise.
The Weak Snapshot Short-term volatility is normal. Markets rarely move in a straight line. The last few days were a reaction to external market pressures, causing a temporary spike in costs. If you take a snapshot of just those 72 hours, it looks discouraging.
The Recovery Today, however, we are seeing a recovery. The market has stopped sliding and is beginning to stabilize. This “floor” is critical. It indicates that the market has absorbed the bad news and is holding its ground.
Signal vs. Noise I often talk about separating signal from noise.
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The Noise: The frantic ups and downs of a 3-day trading cycle.
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The Signal: The long-term stabilization of rates at levels significantly lower than last year’s peaks.
This stability is good news for homebuyers. It means we aren’t in a freefall; we are in a normalizing market. As a Mortgage Banker, my advice is to avoid trying to time the absolute bottom of the market—which is impossible—and instead take advantage of this stability to secure a loan that fits your budget.
If you are concerned about how this week’s market movement affects your loan application, call me. I can walk you through the real numbers.
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Sal Trapani
Mortgage Banker & Owner
MJ Mortgage LLC
281-608-2846 cell | sal@mjmortgagellc.com
Magnolia, TX 77354
www.mjmortgagellc.com
NMLS 1055510 | NMLS 2381195