Dec 23 2011, 1:22PM
Mortgage Rates suffered their worst losses of the week today as light volume and low participation left sellers in control, driving benchmark interest rates higher. When we talk about "sellers," it's in reference to sellers of fixed-income securities in bond markets. The Mortgage-Backed-Securities (MBS) that most directly influence mortgage rates are part of the broader bond markets and tend to move in the same direction as the most popular bond: 10yr Treasury Notes. When sellers outnumber buyers, prices get lower and lower, bringing yields (aka: interest rates) higher. This is happening fairly rapidly for Treasuries, but to a lesser extent for MBS (and consequently lender's rate sheets). Best-Execution 30yr Fixed rates STILL haven't moved higher, but closing costs are quite a bit higher at many lenders today.
What we said yesterday: "Low volume and year-end lack of participation continue to distort movements in the secondary mortgage market. The lower a market's volume, the more weight carried by those who participate meaning that it takes fewer trades/less money to move things around. In general, MBS (mortgage-backed-securities) have pitched and rolled less (for better or worse) than their Treasury counterparts."
Please make sure to read the "important rate disclaimer" at the bottom of the page in considering what "all-time lows" means. The issue of "buckets" as described in the lock/float considerations below, remains a factor that may prevent rates and/or fees from moving significantly lower in the short term.
