At about 11am yesterday, prices of the Mortgage-Backed-Securities most closely tied to rate sheets had bottomed out and began to climb, reaching highs of the day near closing time. That momentum carried through this morning and by noon today, prices were high enough to net loan pricing improvements versus yesterday's and this morning's rate sheets. But with the Fed's buying of longer duration bonds completed in the morning hours, the afternoon was left to test the resolve of the recent rally. MBS fell to close near their lows of the day, but retained a token half tick (one half of one 32nd of a point) gain on the day.
Rather than chalk this choppy movement up to some event or news headline, today's price action is largely a function of technical price movements, where decisions are made based on outright price levels and tradeflows rather than in response to a piece of data's statement about the macroeconomic environment. In other, more frustrating words, yes, we rose and fell today, but it doesn't necessarily mean anything. As you can see on the following chart, MBS are basically going out right where they came in, resulting in similar rates being available this afternoon as we discussed yesterday, about 4.25%.
Important Mortgage Rate Disclaimer: Loan originators will only be able to offer these rates on agency conforming loan amounts to borrowers who are have a middle FICO score over 740 and enough equity in their home to qualify for a refinance or a large enough savings to cover their down payment and closing costs. If the terms of your loan trigger any risk-based loan level pricing adjustments (LLPAs), your rate quote will be higher. If you do not fall into the "perfect borrower" category, make sure you ask your loan originator for an explanation of the characteristics that make your loan more expensive. "No point" loan doesn't mean "no cost" loan. The best 30 year fixed conventional/FHA/VA mortgage rates still include closing costs such as: third party fees + title charges + transfer and recordation + escrows (things like upfront MIP (if required), property taxes, homeowners insurance, accrued interest)".
Bottom line: the name of the game continues to be volatility (NOT NECESSARILY OUTRIGHT WEAKNESS). In fact, weakness is just as much of a risk as strength, although we did get a clear sense today that a good number of sellers were waiting for prices to get to certain levels before selling. But as that continues to happen, as it did today, the selling pressure moves closer and closer toward exhaustion at which point we will have the base of support we've been looking for. And hey! If that continues to happen on days where MBS end the day unchanged, that's not such a bad thing from a day over day perspective despite making for plenty of drama for those paying attention to intraday movements.