Mortgage rates have improved since last Friday. I felt we could delay locks (float) in hopes of better rates and that's proved to be fruitful. Lock-in your mortgage rate on the strength of this improvement.
Inflation doesn't appear to be a threat. Yesterday's Producer Price Index reflected the threat of higher oil prices but came in within reason; the mortgage bonds market liked what it saw. The Consumer Price Index, released this morning, was well under expectations; this should be positive for mortgage bonds and could lead to lower rates.
I expect our morning rate sheets (no points, 1% origination fee) to look something like this:
Next week's Fed meeting could stifle speculation that it will hike interest rates later this year:
While policy makers have signaled they accept an increase in longer-term Treasury yields as the economy improves, some are concerned at any premature anticipation of rate rises. Fed staff have examined the Bank of Canada’s public intention of foregoing an increase until 2010, according to a person familiar with the matter, without concluding the statement has proven effective.
I have mixed feelings about the Fed adopting a policy akin to the Bank of Canada's rate commitment. Markets crave stability but react to reassuring news in a volatile fashion. I wouldn't be surprised to see mortgage bonds decline on such news; traders might think the Fed has abandoned its commitment to taming inflation. Counter-intuitive thinking? Absolutely but reason and rational thought sometimes give way to fear.
I'll update rates later, if necessary.