Mortgage rates have remained stable this week with a conventional loan (under $417,000) offered at 5.25%, a jumbo conventional loan offered at 5.5%, FHA/VA loans (under $417,000) offered at 5.5% and jumbo VA/FHA loans offered at 5.75%. All mortgage rate indications include a 1% origination fee.
I changed to a long-term floating bias, earlier this month, which means I generally believe there is not a reason to lock loans at application. Each situation is unique. My pipeline for August closings is locked today; I'm floating for closings beyond 21 days because I believe mortgage rates will trade in a "range".
If you're a mathemetician, you'll appreciate this analysis using the Fibonacci sequence:
“The bond market rout may not be over, but it looks like it might pause for awhile,” said Rupkey, who is based in New York for the unit of Mitsubishi UFJ Financial Group Inc., Japan’s biggest bank. He sent his comments in an e-mail.
Ten-year yields climbed 37 basis points last week, the most since July 2003. They were as high as 3.89 percent on Aug. 10, the most in two months. The 3.125 percent security due May 2019 was little changed at 95 17/32 as of 11:32 a.m. today in Tokyo.
In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index.
Rupkey’s analysis is based on a sequence of numbers identified in the 13th century by Italian mathematician Leonardo da Pisa, known as Fibonacci. Yields need to move past one step in the series for the trend will carry over to the next.
Fibonacci was considered the greatest mathemetician in the middle ages and his discoveries are often evident in nature. How might Fibonacci sequences apply to the near-term future of mortgage rates? Rupkey believes, based on the Fibonacci sequence that the bond market sell-off raced ahead of the lock-step ascend the Fibonacci sequence supports. His analysis suggests a "pause" in bond sales which portends stable to lower mortgage rates for the near term.
I rely more on fundamental analysis than technical analysis of markets. This means I'm more interested on the underlying economic forces' influence rather than trying to identify patterns in market trading when deciding to lock or float rates. I would never solely rely on the Fibonacci sequence because of the "black swan" phenomena.
It is interesting, though.