Baby it’s cold outside?

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Low rates really can’t stay (but baby, it’s not cold outside)

They’ve got to go away (but baby, it’s not cold outside)

This boom has been (been hoping that rates drop in)

So very nice (i’ll refi your loan, it’ll be so nice)

Really one of my favorite Christmas songs and possibly telling of the current rate situation in a few ways. 

So are super-low rates going to be left out in the cold?  Maybe.  I’ll throw this out there; it’s been a fairly warm winter (save the expected cold spell this weekend – ironic timing).  How much is that warming these numbers?  Well, I’ve never been one to hang my hat on seasonality and how it impacts spending habits, but how it impacts the adjusters is possibly another thing.  We are looking at the best quarter 1 in forever and I’m just not ready to believe that.  We had a weak Christmas and that weakness in sales and consumption has carried over into q1.  Yet we are building a case for a strong quarter 1 and thus higher rates?  The flip side is that as you know I’ve been concerned about the ISM since September, so maybe a better economy isn’t just us Christmas dreaming a little early this year.  

The bottom line is that I’d be on high protect mode in terms of locks even though we are at the upper end of the current range and approaching 12/16/16 levels in terms of high yields.  That said, pushing out to a more macro view,  I wouldn’t mail it in quite yet.  We discussed in an earlier posts that we generally see weakness until roughly week 3 in March, so this move continues to fit that narrative.  The next week is clearly important with NFP and the Fed decision on tap.  Whether we continue in this range or set a new higher one will certainly be answered by next Wednesday.

Stay warm my friends.  

-Philip Mancuso

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