Don't Take The Bait!

From what I've seen coming across my desk this morning, lenders have not even begun to price the improvements into their rate sheets this morning.  For instance, most lenders have improved by about .375% discount, whereas MBS are improved 22-32/32nds.  So there's at least another .25 that will come today if MBS's hold gains.  PLUS, we haven't realized all the benefit from yesterday.

This is not quite normal, but easily explainable: lenders are obviously a bit wary to jump right into the pool while the market is so volatile.  So it's easy for them to raise rates quickly when MBSs tank, but a little bit worrisome for them to lower rates with the same exuberance.  If, on the other hand, we were in a stable, steadily declining economy, more of this MBS strength would be priced in.  As it stands, we'll have to wait for these gains to "prove themselves" by holding throughout the day and possibly into tomorrow.

Whatever the case, don't be locking yet!