Interest Rates Rising - The Makings of a Firsale

ATTENTION: This could turn into a really bad day for interest rates. Have a look at the graph on the right. As you can see we are experiencing a serious sell off right now. We have broken out of our recent range. The current published par 30 year fixed interest rate is still 4.375% for prime borrowers however I am anticipating reprices for the worse shortly. I highly advise anyone that is looking to close to lock there rate immediately. As in right now.

There are a couple of points to consider. Let me borrow a quote from economist and trader Adam Quinones:

Good Morning. Today we celebrate the one year anniversary of "Black Wednesday"

"BLACK WEDNESDAY". A day when "rate sheet influential" MBS were sold by accounts of all types. Banks, Servicers, Pension Funds, Money Managers, and Hedge Funds...Real Money and Levered Accounts alike. After all was said and done, over $10bn in "current coupon" MBS was dumped by mortgage market participants. An amount not even the Federal Reserve could stand up to...

The fact that this sell of is occurring on the anniversary of Black Wednesday is very interesting and troubling. Moving into a long holiday weekend and a very uncertain market I think it is clear investors are looking to shore up funds. In doing so they do not have to concern themselves with "worrying" about the markets over the weekend, and they can reassess come Tuesday.

This may very well be the case, but that does not mean the the week is over. Point in fact we have a 7 year treasury auction going off today (don't forget about the 5 year auction yesterday which was nothing special). It will be very interesting to see how it is received. At this point in time, we need a strong auction to bring some investors back into our market. If on the other hand the auction is weak we could see further losses today leading to even higher rates.

I could continue to discuss reasons for this sell off, our being up 190 points on the DOW, the drop in jobless claims, etc... the bottom line is now would be the time to LOCK and secure a low rate for closing. There are storm clouds on the horizon - batten down the hatches and stay dry. This is the message I would be instilling on any buyers you have right now.