Good Tuesday Afternoon,

I hope you had a Merry Christmas and have had a wonderful Holiday Season.

As happens each year at this time, trading desks are empty, and volume is very light. Unless something unexpected happens (most of the time, these are bad, unexpected things), with the limited data scheduled to report this week, I would not expect too much movement. Any movement we do see is likely a knee jerk reaction and will be better digested next week once desks are full and traders are back to work. Any improvements in the bond market are not likely to find their way into rate sheets for a bit as the prepayment concerns are already running high.

It is a conservative week for sure.

With limited benefit to floating, the bias should be to lock anything closing soon. If you are looking at end of January, you likely have some time to wait to lock. I do see rates continuing to improve however, it is never going to be a straight line up or down. The charts show bonds are currently very overbought, so one of two things are likely (maybe both). The first is bonds selloff a little so the buy/sell becomes more balanced or second, time fixes the imbalance as more buyers come to the table. Likely to be a combination of both. I am not too worried that any selloff will be large, change the bias we currently hold toward lower rates, or impact rate sheets much as not all of the recent gains have not found their way into the rate sheets yet (prepayment concerns are a big issue for everyone…).

A quick comment on the data released today which showed overall, home prices are still going up. Given this is data from October, so it is not the most current nor is it market specific. Nonetheless, in a broad sense, it is good news.

Please remain safe and healthy, make today great!