August 14, 2023 – Rate Commentary

• August 14, 2023
• realestate
• Business & Markets, Fed, Interest Rates, Politics & Economy, Rates, Real Estate, Real Estate Finance, Recession, World News, Your Real Estate Life

WRAP UP
UMBS 5.5: 98.00 (-36bps)
10yr yield: 4.20

Mortgage bonds improved through the afternoon, only to give back all the gains. Lenders that repriced better may reprice worse again before day’s end. Rates look likely to creep higher from here, reaching 2023 highs and maybe matching the worst rates we saw last October. They will fall again, but now it is a matter of when. Consider locking risk averse and near term closings.

Rate sheets will continue worsening today, with reprice risk on the day being moderate. We can start the day cautiously floating, since there is no point locking these dismal rates yet, and see if bonds show any kind of recovery that could open the door for pricing to improve. If not, it will be a bad sign that we are very likely to see rates continue to move higher and you may want to lock for protection, as bad as it is. There is no economic data on the day, with little for the week, and we could be in for a rough ride. The outlook is not so rosy my friends, I’m sorry to say, and getting worse by the day.

Cautiously float all loans, and let’s see how the day goes. We are only floating here because it sucks to lock at the top of the range when rates are at their worst, only to see them improve as the week goes on. However, we have to be ready to lock in case rates move to a whole new worse range… a real possibility right now. Although last week we did see pricing improve with the CPI inflation data, it has been all downhill since later that day. We now look poised to see the worst rates of the year.

Technicals:

The UMBS 5.5 coupon (MBS or mortgage backed securities) at 97.98, -40bps on the day and below the 98.23 technical support level we were watching.

The 10yr Treasury yield at 4.21, testing new highs for the year.