Rate update: Languid market – Should you lock or float?

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By G. Steven Bray

Mortgage rates moved very little last week and remain near 3-year lows, and I don’t expect them to move much this week either. The only US economic data of consequence is housing-related, and I suspect it would have to be really scary to perk the interest of bond traders. It’s more likely traders will focus on stock and oil prices and market fundamentals.

Of more interest may be the European Central Bank meeting this week and Federal Reserve meeting next week. Neither is expected to announce any changes to current benchmark rates or programs. And that’s where things could get interesting if either drops a surprise. However, I think that’s very unlikely. The following week, the first week of May, is another jobs report week, which always is a potential market mover.

So, should you lock or float your rate? Locking certainly is a reasonable choice given our closeness to recent lows and given the inability of the market to move lower. However, floating is not an unreasonable strategy given the market’s lack of conviction to move rates higher. If you do choose to float, I suggest you choose your maximum pain point, the rate at which you’ll lock if the market moves against you.