Bad Day for Bonds!
Yesterday was a bad day for bonds. A poor 7yr note auction pushed the UMBS 30 2.5% coupon down 36bps to a floor of support at 101.80, while the 10yr T rose 8bps to 1.55, which is just 5 bps below the current ceiling of resistance of 1.60.
I always get nervous when the markets move sharply right before a holiday weekend, and with this weekend bringing in the New Year, it bears watching closely. As I have maintained for a while now, if you like it, LOCK IT!
I am interested to see activity in the housing markets this weekend. With buyers still hungry for homes and the excuse of waiting to after the holidays are over now past, it will be very interesting to see the first few weeks of January go, especially if we see mortgage rates ticking up as well.
So be aware of the markets and especially for those who are already in a tight situation. Rising rates as well as higher home prices can change debt ratios very quickly. So be sure all of your preapproved borrowers understand how the payment they are qualified for can no longer support the same house they saw just a few weeks ago. It’s important that people understand how a mortgage payment is calculated and the impact of every item on the list that contributes to the total payment, not just the rate!
Have a safe and happy New Year! 2022 will be a huge opportunity for those purchased focused originators!
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