LOCK RECOMMENDATION = Short term lock.  20 days+ Float.


It's a strange day in the markets. Several indicators should be leading to improved interest rates, namely the worse than expected consumer confidence report and the sharp decline in home prices.

Despite this, the Dow is up almost 200 points right now and climbing.  Why!

Scanning the financial news today, it's hard to get a commitment from any of the major news outlets as to why the big swing has occurred.  I'll take a stand.

 Sure we have decreased oil prices this morning.  Also, banks are up after the news that Citigroup will receive a huge investment from overseas.  And these things have helped the stock market to some extent but certainly don't account for the huge swing we've seen this morning.

 IT'S TECHNICAL.  You'll hear me talk about technical factors frequently.  My favorite analogy is the rubber band.  Thinking of technical factors is like thinking of a rubber band that traces the moving averages of the bond and stock markets.  The more the rubber band gets pulled away from the baseline, the more resistance for it to go any further. 

That is what is happening last night and this morning.  Yesterday afternoon the bond market was overbought and the Dow had a reactionary sell-off.  The 10 year note was at a 3 year low.  Although investors were calmed by the the investment in Citigroup, the extra oomph that the market has this morning is the pendulum swinging back from yesterday afternoon's exuberance. 

As such, mortgage rates have dialed back a bit with a 30 year fixed costing an additional 0.25% of a discount point.  If stocks stay at the 200 level throughout the day, expect another .125% worsening by the end of the day.

If you have a loanclosing immediately, lock it now.  Beyond that, the weak consumer confidence is a reasonable sign that we could expect to go even lower in the weeks to come.  Keep an eye on the financial reports coming out this week for further indication.



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