Will Those Low Mortgage Rates Start to Rise Now?
Update on: Mortgage rates at a 50 year low?
Last week, we wrote about the decade lows on Mortgage rates. We had mentioned that the 30 year yields (TYX) had tested and held our 38.34 support level ... and that: "a very large positive divergence had developed at the same time this support is being tested ... The timing suggested that there was a real possibility for 30 year yields to jump up from that level." Additionally, we had commented that: "With talk about eliminating 30 year mortgages going around, this might be a missed opportunity if not acted upon by new home buyers." (* See Chart 1 for last Friday, and Chart 2 for TODAY.)
Well, here we are one week later to explore what has happened ... see Chart 2.
Chart 1: Last Friday's chart ... July 2nd.
Chart 2: Today's chart ... July 9th.
As expected, we did get a jump up from the 38.34 support level and the jump took us to the April/July resistance line where it will test it today. At this time, we expect the 30 year yields to break above that 3+ month resistance and to see 30 year mortgage rates increase. There has been no basing on this chart yet, so there is still likely more work for the TYX to do in order to develop a solid support for the upside ... but for now it will be getting help from a pretty strong positive divergence.