Mortgage Rate Update March 13, 2017

Mortgage rates had a rough time last week.  They now stand at their worst levels in over two years.

Friday’s all-important jobs report was better than expected.  It showed that 235,000 jobs were created during the month of February and that wages increased by 2.8% year-over-year.  With these results the Fed is almost certain to hike short-term rates by .25% again on Wednesday.

Should we be concerned that mortgage rates will also increase?  After all the Fed does not directly set mortgage rates.  Mortgage rates drifted higher last week in anticipation of a Fed rate hike so in some respects the damage is done.  Furthermore, when the Fed hiked in December mortgage rates declined shortly thereafter.  Maybe we will experience the same reaction this go around.

From a technical perspective interest rates appear ripe for reversal after trending higher last week.  The yield on the US 10-year treasury note touched ~2.63% on Friday and is starting the week moderately lower.

However, we have to be careful because if yields move above the 2.63% threshold mortgage rates will continue higher as well.

This week’s economic calendar is busy.  The highlights include the Producer Price Index (Tuesday), Consumer Price Index (Wednesday), Retail Sales (Wednesday), Housing Starts (Thursday), and of course national Guinness Consumption Day (Friday).

Current Outlook: floating