November 7, 2023 – Rate Commentary

• November 7, 2023
• realestatelife
• Business & Markets, Fed, Interest Rates, Politics & Economy, Rates, Real Estate, Real Estate Finance, Recession, World News, Your Real Estate Life

Rate sheets this morning should be similar to yesterday, and reprice risk on the day is moderate. There will be an army of Fed officials out there spewing their opinions today, and it’s already started with Kashkari and Goolsbee. This afternoon we will see the Treasury 3-year note auction, which normally wouldn’t be a thing, but with the Treasury selling $112 billion of new notes and bonds this week markets will be watching for investor appetite. It’s possible a solid CPI inflation report next week could push rates a bit lower, but I wouldn’t yet say that’s probable. My advice remains the same… lock up anything closing in the next 30 days or so unless the consumer has a REALLY high risk tolerance.

For loans closing in less than 15 days, lock. Yesterday bonds lost a bit of ground from Friday early, pushing rates a bit higher, but then ended the day about the same. Today bonds are starting at almost the same level. The point here is that we are more likely to see rates creep up a bit than drop down from here. Not worth the risk of floating.

For loans closing in 15-30 days, lock. Similar to above, it isn’t worth the risk to float. For those that DO want to risk it, next week’s CPI data could help, as well as the Thanksgiving holiday. But the reality is that it isn’t likely we see rates drop much from here.

For loans closing in 30+ days, cautiously float. These loans have the least to lose, because based on the current outlook we are likely to see rates hit these levels again even if they creep higher. It’s not a bad idea to lock them if you like the pricing, but for those that can’t lock or want to wait a bit there is less risk than loans closing near term.

Technicals:

The UMBS 6.0 coupon is at 98.77, +3bps on the day.

The 10yr Treasury yield at 4.62, the same as yesterday.