North Dallas has enjoyed some terrific mortgage interest rates lately as mortgage backed securities have been trading in a very positive range. In fact, mortgage interest rates are at the lowest levels this year! However, they are capped off by a strong ceiling of resistance which is a huge roadblock to further improvement.

Heading into the Memorial Day holiday weekend, as with any 3 day holiday weekend, Wall Street traders are likely to slip out early for the Jersey Shore, Fire Island, or their backyard BBQ.   As a result, trading volume will likely slow which will likely cause a jump in volatility.

The mortgage backed security market is mostly driven by fundamentals, which are news items and economic reports. In the absence of fundamentals, technical factors will drive the buying and selling decisions of traders. But toss in a holiday with traders taking extended time away? Now you have an exacerbated market.

Today, both GDP and Initial Job Claims were stinky reports, giving mortgage backed securities a boost (good for rates). Tomorrow a few more economic reports are due, one being a granddaddy – Personal Consumption Expenditures. This is the Fed’s favorite gauge on inflation and if disappointing, look for the bond market to pull back and mortgage rates to increase.

Combine tomorrow’s newspaper with more traders vacationing than on the floor…could be the recipe of a Memorial Madness for mortgage rates in North Dallas.   While the volatility could move the markets in either direction, the likelihood of mortgage rates moving slightly higher is greater than rates improving. It’s the old “supply and demand” at work. With less buyers (Wall Street traders) over the next few trading days, prices will probably drop. And as prices drop, mortgage rates go up.

If you are in the market for home buying, this would be a good time to consider locking in a mortgage rate. Mortgage interest rates are in a sweet spot and super low, but eventually they will move higher.

Happy Memorial Day!

Elizabeth Rose