Mortgage Rates Are Climbing

Mortgage rates were still climbing today before settling down by the end of the afternoon.  Unfortunately, all the positive news we have seen with the downward trend of the rates for 2014 have almost eroded as we are back to the same levels we were during the second week of January.  Bond markets and Mortgage Backed Securities (MBS) reacted accordingly.  4.5% has now become the most prevalently quoted conforming 30yr Fixed rate for the best-qualified borrowers.

Today's move followed a stronger-than-expected Employment Situation report.  This is the most significant economic report each month and when it's strong, rates tend to suffer.  Moreover, the report still managed to offer a fairly profound commentary on the effects of winter weather as more than 6 million workers reported missing work last month due to weather.  Compared to an average of 70k workers each February who miss a complete week of work due to the weather, today's data showed far more of an effect with 120k workers missing a full week.  Had the numbers been more in line with the 70k average, it would have made for an even stronger read on job creation.  There is likely enough in this report to keep the Fed on track to scale back its monthly bond buying by another $10 billion at its March Policy Meeting.

Unfortunately technicals broke down this afternoon when the 10yr broke above 2.77%.  MBS also caved in but it is up to the 10yr to drive mortgage rates higher. We will hold off with any forecasts until next week when markets settle down and the weekend is over.  In Crimea it appears the country will vote on the 16th whether to re-join Russia and leave the Ukraine.   Russian presence in the country is said to be driving a vote.  Given the breakout on the 10yr I suggest to cautiously float if you did not grab the mortgage rates as I forecasted on Thursday.

In summary, if you are a regular reader, you've heard us discuss NFP Fridays' impact on rates, and today's report illustrates why. It beat market's expectations (potentially indicating a healing recovery), and rates rose accordingly. It will take escalating Ukraine Drama or dismal economic data to change market sentiment. Until then, best course is locking early, unless you're prepared to accept higher mortgage rates when you do lock.

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 me on my website at www.CallTheMoneyMan.com   I have access to real time Wall St. data and instant market alerts with breaking news that I monitor throughout the day to assist us on making the informed decision.