Following a global sell in equities yesterday, prices of mortgage backed securities rose into a range not visited since late July. The rally in secondary markets helped mortgage rates fall to monthly lows.
But will it last?
Mortgages failed to keep the pace with rallying Treasuries yesterday and this morning MBS are already losing steam as stock traders look to test the extent to which equities were sold yesterday. Although mortgage rates fell to previous August lows yesterday, it may not last long if stocks decide pessimism was unwarranted. There has however been a change in market sentiment. Fundamental economic releases, mainly consumer related data, should soon start to have more of an effect on mortgage rates.
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