Mortgage Market Summary as of April 2, 2018

Mortgage Rates Unchanged Despite Market Improvements

Mortgage rates were generally unchanged last week, although a few lenders offered slight improvements.  This stands in contrast to the noticeable improvements in underlying bond markets.  Treasury yields are leading the charge toward lower rates, and while the bonds that underlie mortgages are definitely lagging that move, they're improving nonetheless.  But again, you wouldn't really know it based on today's rate sheets.

The absence of lender improvements is unfortunately par for the course.  It was only a half day for bond markets on Friday and today is a full closure for the Good Friday holiday.  As such, there's additional risk involved for lenders dropping mortgage rates for two reasons.  First, the counterparties required to trade the underlying bonds are harder to find on either side of a holiday weekend.  Also, an extra day and a half simply creates risk of additional market movement between now and the next time lenders can update rate sheets.  If they priced too low this past Friday and rates jump higher this week, Friday’s commitments would have cost lenders more money than a typical market swing because let’s face it, lenders are in business to make a profit…pure and simple.

Courtesy of Rick Lombardo 310.435.7439, Rick.Lombardo@grarate.com, VP of Mortgage Lending at Guaranteed Rate.

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