Mortgage Rates Witing For Jobs Report Data

Mortgage rates were a tad lower today, bringing them back in line within that tight range we have been in for the past two-three weeks. 

Today's improvement came courtesy of a policy announcement from the Bank of England (BOE) when it stated that they will cut interest rates and started a big QE to buy UK bonds and some corporate bonds. The Bank also lowered its previous economic outlook and also said it expected to cut rates again to close zero joining the ECB and the BofJ.

One take away, the Fed should not increase rates this year – however, you know how that plays out when the FEDSPEAK gets going. The BofE made a valid point as it struggles with the outlook; it will not be concerned about inflation as the Fed does constantly. The Bank saying, it will be accommodative until inflation actually becomes an issue - not concerned about getting ahead of it as the US Fed and its minions continue to worry over.

Naturally, the BOE is not in charge of mortgage rates in the US.  Even the Federal Reserve cannot quite make that claim.  But...  The actions of the world's biggest central banks are the most important factors when it comes to general momentum in interest rates around the world.  Simply put, the BOE said it will be buying more bonds than expected.  More bond buying results in lower rates - all other things being equal.

The actions of the Federal Reserve are much more important to domestic interest rates, including mortgages.  The Fed (and the rest of the world, for that matter) will get an important piece of economic data tomorrow morning in the form of the Employment Situation (aka the "jobs report.")

In summary, floating into the employment report is dangerous but tomorrow might be a good day to do so. If you are closing in the next 15 days, I would still lock as I feel the risk is too great out there – but the wider look is bullish for interest rates. The stock market is weak, the Bank of England’s decisions today support lower rates coming. A stronger report or a report that is generally in line will not likely hurt the rate markets much and it will be short-lived. Another weak report will drop stock indexes and interest rates will decline and prices of MBSs will increase. Certainly with the recent history outlined above, it is a risk for the near term.  Can you afford to lose?  Then let’s hope we are both right, as I am always a risk taker when it is my money, and conservative if I know that it will be too much for my customers.