Mortgage Rates Slightly Higher Today

Mortgage rates were slightly higher today.  The last day of any given month can bring increased trading activity, and this helped January end on a decisively positive note.  The first trading day of the following month often sees a bounce back in the other direction – but today did a good job of holding on to recent gains.  For perspective, last Friday was the only day in the past 21 months with lower rates, and many borrowers saw their quotes unchanged over the weekend, with a few seeing minor increases in costs as opposed to changes in the contract rate itself.  

Looking at the close, it does not seem that there was much volatility out there today.  The DJIA was up and down, but did close on a positive note.  The volatility on the MBS’s and treasuries was a bit volatile, but held steady even though it wound up on the negative side with the 10yr Treasury ending where it began at 1.68%.

This is employment week.  The crucial part of the BLS data for December is the average earnings.  It has been declining for the past two months that if it continues, it will add an additional concern to the inflation outlook.  Preliminary figures are stating no change, with an increase in non-farm jobs of 230K and the unemployment unchanged at 5.6%.

In summary, last week put us into a new area for interest rates, and possibly enough fuel to keep the momentum for a move closer to the historic all-time lows. Lenders will be hesitant and cautious to pass these gains for many reasons, but ultimately, the longer we stay at these levels or better, the more likely we see it pass through to rate sheets for our clients. Loans closing within 15 days should be locked, loans closing inside of 45 days should be very defensive and cautious as the current realm we are in can disappear much faster than it took to get here. Locking at these levels seems to be the smart move, even if rates and spreads continue to improve. I believe we have yet to see the bottom, but there is always an additional risk with employment on Friday.