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The theme this week has undoubtedly been the extreme lack of volatility in the rates market. Whether we’re looking at mortgage rates themselves or broader rate benchmarks like 10yr Treasury yields, both are in line with their latest levels Monday afternoon.
what’s up with that?
The bond market (which sets rates) needs a steady stream of inspiration if it is going to induce a noticeable change in rates. Sometimes multiple sources of inspiration cancel each other out. Other times, the stream gets a bit dry, as it has been this week.
It won’t stay dry though. By the end of next week, the market will have had a chance to digest several new, important economic reports. Those reports are always worth some potential market activity. In this case, we are more likely to see a noticeable reaction simply because flat positions make traders more eager to identify (and react) to the next move.
In terms of nuts and bolts, the average lender stays in the mid-6% range for the top tier traditional 30yr fixed mortgage scenario. Be aware that buy “points” (or “discount points”) currently fall at a higher rate than normal. The average lender will earn the same income at a rate of 6.625% as they would at 6.125% with one additional point (ie 1% of the loan amount paid upfront). That’s roughly twice the bang for the buck as the discount point would normally be.
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