In news released this morning, new home sells fell to their lowest level over 12 years.  The reading was a bleak 647,000 compared to expectations of 715,000.  This is a 9% drop from last month.

This has prompted traders to begin to "price in" expectations of future rate cuts in addition to the standard "flight to safety" we normally see after weak economic news.  Either way, it's good news for interest rates.

MBS's are up broadly, in some cases over 20/32nd's.  This will lead to drastically improved pricing this morning over yesterday's rates.  I'm expecting the best available PAR rates on 30 year fixed to be back down in the 5.625% range.

Lock Comment: With no more major economic news for the day, keep an eye on stocks for indications of potential rate changes.  If you keep a diligent eye on stocks, float through the day and possibly through next week.  We can look for some more direction from the existing home sales number on Monday.  The markets are closed on Tuesday.  As always, locking is the safe bet when MBS prices are near the top of their trading range which they are now, but any more weak economic data next week can push rates even lower.