Mortgage Rates Back Up

Mortgage Rates moved higher today, perfectly erasing yesterday's solid gains on average. Movement continues to be only moderate in the big picture and hasn't yet affected the most prevalently-quoted rate of 4.625% for ideal, conforming 30yr Fixed loans. That means both yesterday and today's moves would be in the form of closing costs for most borrowers.

 

Today's weakness was priced in to the first rate sheets of the day following a stronger than expected employment report from ADP. While the upcoming Employment Situation report on Friday is the biggest consideration for rates, the ADP report is the most closely correlated early indicator. While this never guarantees the outcome of Friday's report, it can certainly nudge the forecast in one direction or the other, and that's enough for markets to trade on.

 

In fact, the 5 minutes following the ADP data was the most active in 2014 so far, and by a wide margin at that. That is a valuable albeit logical clue as the the significance of Friday's report. As was the case with today's, it too has the potential to move rates in either direction, except on Friday, the risk and reward is much bigger.

 

In summary, all good things must come to an end, and they did in rate markets today as we lost much of the week's earlier gains. ADP's December employment projection beat forecasts, leading investors to expect a strong NFP report on Friday. We did get the good news that projected cost increases from Fannie and Freddie for most borrowers are officially on hold pending further study. Improvement in mortgage rates is fleeting these days; the trend is towards higher, not lower rates.

 

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