Mortgage Rates Down Despite Strong Jobs Report

Mortgage rates moved lower today, despite an exceptionally strong jobs report - something that typically sends rates screaming higher.  Recently, however, we have seen a disconnection between rates and economic data, and today's jobs report was the ultimate test in that regard.  Bottom line, the data was so strong that it would unequivocally have pushed rates higher UNLESS rates had something else very big on their mind.

Like the little engine that could …. I think I can, I think I can, I think I can  …..but the little engine that made did it left the equity market still puffing.  Markets tossed the jobs report in the round file. China is the headline. US job growth is suspicious - ISM indexes weakening, manufacturing soft -  job gains going the other way? Must be temps - markets saw it and immediately forgot about it.

Indeed, multiple financial markets have something very big on their minds - namely, the significant losses in global stock prices, the ongoing slide in oil prices, and the possibility that the Fed's recent rate hike merely served as the catalyst for the start of a longer term move away from "risk."

When investors move away from risk, they do things like sell stocks and buy bonds.  That's happening now, and bond buying makes rates go lower.  That's why today's rates are the lowest they've been since early November.   Even if this phenomenon continues, it's at high risk of being spooked by false starts in the stock market. 

In summary, despite very strong job growth last month, the lack of income growth and continued fears of a global growth slowdown has helped rates post some decent gains today.  The environment that influences interest rates and mortgage pricing continues to be complex.  Two themes are prevalent right now.  The global economic environment increasingly is in turmoil and the Fed is trying to find a way to "normalize" interest rates.  How this plays out over the first half of 2016 will be interesting and while it very well may result in even better mortgage rates at some point in the near to medium term the volatility I expect during this time leads me to recommend keeping yourself protected.  That means if you are happy with this rate, lock it and do not look back – however, if you like the risk and want to play, just be prepared that it could turn just as quickly.