Mortgage Rates Low- Don’t Wait to Lock Later in the Week

Vacation weeks are rough on mortgage ratesMortgage rates across California are near year-to-date lows, but locking them in this week may be difficult. As Memorial Day nears, and Wall Streeters get a head-start on the long weekends beginning mid day Thursday, trade volume in the mortgage bond markets will dip.

Mortgage Interest Rates are tied to Bonds

When bond volume drops, mortgage rates get jumpy. It’s a relationship based more on scarcity than actual market fundamentals.

It works like this:

  1. Conforming and FHA mortgage rates are based on the “market price” of a mortgage-backed bond
  2. Mortgage-backed bonds can’t be bought or sold without a buyer and a seller at a specific price

As Friday gets closer this week, and more and more Wall Street traders will leave for their “extended” 3-day weekend, and bond markets will be left with fewer and fewer participants. This will create a market situation in which it’s harder to match a buyer and seller at any given bond price, resulting in larger mortgage rate shifts than usual.

These jumps in rates are exaggerated during periods of economic uncertainty like these. What’s more, there’s a lot of economically-important data due for release this week. That, too, can put markets in hysterics.

If this were a “normal” week, mortgage rates would be volatile. The coming of Memorial Day is just adding to the mix.

Have a Plan for your Mortgage

Mortgage rates may rise in the Bay Area this week due to volume, or they may fall. So, be ahead of the news.  With rates low the clock is always ticking and the time to start planning is now. It’s my pleasure to work for my readers and I’d be happy to help you with your Mortgage Planing, too. Message me below to get started today.

 

 

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