Mortgage Rates Near 2017 Highs

Mortgage rates rose again today, bringing them near the highest levels we have seen in 2017.  In the last two weeks, we have seen some positive economic indicators that has the markets jumping, but not in the direction that most had hoped for – especially those who are still looking for a new home. 

This week, rates are responding to very strong employment numbers and are anticipating a blowout Jobs Report tomorrow.  And to top it all off, the Fed is looming in the background.  Several weeks ago, there was a group of us (I am throwing myself in the mix) that anticipated that the Fed would “hold” their decision to increase rates and wait until June.  Recent turn of events has now put pressure onto the Feds that they may have waited too long – that the job market is strong, and inflation is heating up.

Bond markets are feeling pessimistic right now, primarily due to the recent and rapid increase in Fed rate hike expectations.  Beyond that, things like economic data have the potential to drive nails deeper into coffins.  Even with the data today (Weekly Jobless Claims) and the Treasury 10-yr note auction, which was met with typical results, were not enough to generate a turn of events that we have seen in the past five days. 

I can only assume that there is evidence that rates could go higher if the number is as robust that came from ADP yesterday.  In my opinion, I believe that this recent rate upheaval is “overdone” at this point, and is poised to come back for a reversal of some sort.  Rates are in the low 4’s, but they may come back as 2017 marches forward, as there is still plenty of geopolitical concerns, many of which resulted in low 2016.  None of those issues have been resolved, so do not throw in the towel and say that this is all over – as this could still be another year for mortgage rate shoppers.

In summary, we have the all-important Jobs Report tomorrow with indications it could be a strong number based on a much higher ADP report yesterday.  While it is likely that this has been priced into current levels rate pressure has been higher virtually every day for well over a week.  This might make you think we are due for a bounce lower and while that is always possible I think the trend is not our friend now and locking your rate for the next 30-days make sense.