Giving reliable advice to my clients as to whether they should LOCK or FLOAT their interest rate when they have a mortgage application with me is a major goal of mine. Their decision (based on my advice) has long term consequences and if they (and I) choose wisely so that they can maximize their investment return on their mortgage.
A mortgage is another form of investment strategy, but this is a whole blog post to come in the future. I look forward to talking about the value of a "Big FAT 30 year mortgage" in a future Blog Post.
But today, what I want to talk about is what I use to gauge what is going on in the market TODAY, right this moment, and is something available to me and it's called "Japanese Candlesticks". I would like to explain why this is valuable and important to me AND to my clients who are relying on my expertise and guidance,
What you see below is today's Japanese Candlesticks Chart (4%, 30 year bond yields) and it is showing lots of green "candles". Green is Good! It means that mortgage rates are improving or the market is favorable. The last green candle on the far right of the chart (right next to the S1 in the blue box) is today's market activity.
Tomorrow's rates should (unless the market changes dramatically overnight or in the early hours of trading in New York tomorrow morning) be about the same, possibly better than they were today.
Yesterday's rates were worse than today's (the red candle shows a lower price, higher mortgage rate than today's), and so forth backwards. Over the past 17 trading days the rates have been close to, above or just below the best rates in 17 months (best since May 8, 2013).
The S2 line, below the candlesticks, is the FLOOR of SUPPORT and with the rates close to this floor, if the bond prices begin to break below this floor, like happened yesterday for two hours, we COULD see the mortgage bond prices begin to deteriorate and we could see these great rates go away (go up!) and this could be forever or temporarily, that is the gamble of NOT taking advantage of rates today.
Call me today if I can help with analysis for your mortgage refinance or purchase. :)
