Mortgage Rates Drop to Lowest in Twelve Months
This week opened with a sharp drop in mortgage rates. Most lenders have been offering their lowest quotes in almost a year. While many others have been sticking with Friday’s rates, they have been pairing these with lower closing costs.
Generally, you can’t expect rates to move this dramatically more than twenty times throughout a single year. In this case, the drop can be attributed to MBS, or “mortgage-backed securities”, representing the bonds that are most closely related to mortgage rates. When trading is calm, such bonds behave like you might expect from the interest rate world, but when the rest of the interest rate world is rapidly moving lower, they have a tendency to underperform. Therefore, when ten-year treasuries were down 10bps on Monday, lenders adjusted their mortgage rates accordingly.
Should market trading levels hold their ground, mortgage rates could very well drop even further. Of course, the risk of a significant bounce offset the possible benefits of floating. Locking into the current lows is the best choice for most people.
