Mortgage Rate Update December 2, 2013

Although mortgage note rates are unchanged from last Monday the associated closing costs are slightly worse.

The next couple days are expected to be relatively quiet but the calendar heats up the latter half of this week.  Its jobs week so beginning Wednesday we’ll get the ADP employment report, initial jobless claims on Thursday, then the all-important jobs report Friday.

The markets are still uncertain when the Fed will begin to unwind quantitative easing (QE).  A stronger than expected jobs report, like we got last month, would likely pressure rates higher and vice versa.  We’ll go into detail about the jobs report strategy on Thursday.

The technical outlook for mortgage rates is mixed.  Mortgage-backed bonds (MBS’s) are currently trading just above the 100-day moving average.  Should MBS’s drop below this level of support mortgage rates would likely increase .125%-.25% in a hurry.   All else being equal I would expect MBS prices to bounce higher off this level which would cause pricing on rates to improve.

In contrast, the yield on the US 10-year treasury note is steadily climbing which does not bode well for mortgage rates.  During the month of November yields climbed from 2.50% up to 2.80% and this pattern appears to be in tact.

I will lean towards locking as momentum is not in our favor.  But all bets are off Friday with the jobs report.

Current Outlook: locking