Mortgage Rates Higher

Mortgage Rates again went higher for the third straight day, as the floor that we hit on Monday are still being felt, but we are climbing to the next level.  The emotionally dominated stock market rallied today while the more serious bond Mortgage Backed Securities (MBS) markets were relatively quiet.  Even though the last three days have not been horrible, if you add all three together, the entire positive we got to Monday has been erased.  We're now back to 4.375% being the most prevalently quoted conforming 30yr fixed rate for the very best borrower scenarios

The improvement in the stock market pressured bonds and mortgages as is the case recently. Stock indexes improved with bets that tomorrow’s employment report will at least meet expectations of non-farm job growth of 185K and the unemployment rate will stay unchanged at 6.7%.   This monthly report is by far and away the most important piece of economic data available each month.  Nothing else has as much power to cause movement in interest rates.

As I been mentioning the past few days, the reason why rates were moving had to do with financial markets repositioning themselves in the first month of a new year.  This change (more 300 point drops than we had seen in the past few years in less than 30 days) helped make it an easy decision for rates to take a similar break after moving exclusively higher over the past two months.

Unfortunately, have we seen the final correction on how low the mortgage rates could have dropped?   Both sides are hoping that we get another spurt, while others are saying we are done.  This roller coaster will still continue as I do not feel either side has much merit, but a shift can and will occur towards one or the other if we get a surprise tomorrow as we did last month.

If we see a strong report, rates will definitely be on the upswing.  On the other side, an exceptionally weak report could do more than normal to help rates dip further as this would be another sign from last month’s report that this recovery is not as strong as some are stating.  Of course, I do like one report that came across my desk today that the wild card could be played and put the negative report blame on the weather.

In summary, I hope that a number of you have locked in your rates as tomorrow is just too risky of a call.  Last month I was wrong, and I certainly would love to be wrong twice in a row, but I am not able to predict the future, but analyze whatever I see and pass it on to my clients.  We are not going to see rates as they were last summer, but these rates today are far better than what we have seen this past Fall of 2013.

Stay tune for the big announcement tomorrow….