Mortgage Rate Update December 1, 2016

Mortgage rates have worsened modestly this week.

On Monday I had recommended a ‘floating’ position with the hopes that the yield on the US 10-year treasury would respond to technical trading patterns and reverse below 2.38%.  Pricing on mortgage rates did improve Monday-Tuesday but starting yesterday rates have worsened.

The yield on the US 10-year treasury is now up to 2.46% and mortgage rates have worsened by .125% in response.

Tomorrow we get the last all-important jobs report for 2016 (and the last one prior to the next Fed meeting).  The markets are currently expecting +180,000 new jobs added during the month of November.  Not coincidentally the average monthly job growth from January-October 2016 has been +181,000.

Aside from watching the number of new jobs added analysts will be keeping a close eye on average hourly earnings.  In last month’s report average wages increased by 2.8% compared to the year prior which represented the largest increase since 2009.  Should wages continue to press higher it would raise concerns about wage-based inflation.  Inflation is the primary driver of mortgage rates.

From a technical perspective the damage of not locking Monday-Tuesday has been done.  I am going to maintain a floating bias.

Current Outlook: floating