Mortgage bonds opened slightly lower this morning after yesterday's massive
"flight to safety" rally.
Investors are favoring bonds in
light of various risk events, including ongoing tensions between the US and
North Korea, uncertainty about budget negotiations in Congress, category 5
Hurricane Irma plowing through the Caribbean, and cautiousness ahead of
tomorrow's European Central Bank monetary policy meeting.
Even so, bond
investors may be reluctant to continue driving bond prices higher due to
the "prepayment risk" of borrowers with higher-rate loans
refinancing into loans with lower rates. Bond investors lose money when
this happens, so this may put a damper on further mortgage price
improvements. Keep in mind that mortgage prices are currently at
their best levels in over 10 months. The Fed's mortgage bond buying program
today is limited to $600 million of 15-year conventional mortgages.
What should you do
about it? Lock your rate to be safe.
reports that may impact mortgage rates this week: