Mortgage Rates Jumpy After Strong Jobs Report

Mortgage rates were jumpy today following a strong Jobs Report which proved to be a negative for Mortgage Bond Securities (MBS).  The most prevalently quoted conforming 30yr fixed rates for top tier borrowers was still at 4.0%, but closing costs associated with these rates were coming into play more than the past few days.

Just like yesterday when I was caught off guard, today it went the other way as we saw a huge Jobs Report more than anyone expected.  Unfortunately, no matter how great this number was, one should step back and realizes that what do most employers do around the start of the holiday season?  They hire employees for the rush!  As grand as this number was, I would expect that we will see strong revisions downward next month.

Interesting on how the media is taking this at face value – but as good as this was, if it was just as bad, they would be finding reasons why it was skewed.  The debate will continue, but right now we will just go with the punches.  The reaction in the bond market did see rates increase, but was minor as one would have expected more. Although we are suspicious, markets reacted the way they should have and now your techs are slightly bearish.  Maintaining our discipline is important now.  Monday’s trading is the key as more selling in the bond and mortgage markets will accentuate the bearish bias.  As I noted above, I do not believe the report is accurate, but it is what it is.  The 10yr did cross the 2.30% mark and closed at 2.31% - a little bit of a difference from Black Friday when it was at 2.17%.

In summary, to lock or not to lock is the question on everybody’s mind as it was yesterday before the Jobs Report.  The suggestion all week was to avoid large risk and the sooner in the week you locked, the better.  If you did not lock and/or just starting an application – what to do now?  Considering the numbers this morning, I was surprised that we are not worse off – or at least we should be.  Why aren’t we?  I think there are a number of global factors helping create a bias towards lower rates.  I would cautiously continue to float, but if we some more selling early Monday morning, lock immediately.

Remember, if you want to know the benefits of locking your rate today versus floating, simply give me a call at 314-744-7806 or visit my website at www.CallTheMoneyMan.com. I have access to real time Wall Street data and instant market alerts with breaking news that I monitor throughout the day to assist us on making the informed decision.