Mortgage Rate Update February 10, 2014

Mortgage rates remain at the low levels reported in last Monday’s ‘rate update’.

Friday’s all-important jobs report was a bit of a mixed bag. On one hand it showed that only 113,000 new jobs were created during the month of January. This was far below analysts’ expectations and paints a potentially worrisome picture given that December’s jobs numbers were also disappointing. Bad news for the economy is good news for interest rates.

Conversely, the unemployment rate ticked lower to 6.6%, the best reading since 2008. Good news for the economy is bad news for interest rates.

Why the divergence in these two figures? The jobs number is obtained through a survey of businesses and the unemployment rate is obtained based on a survey of households. The two different sets of data have struck up a debate within the economic community as to which is more telling moving forward. I will not attempt to defend either report but the bottom line is given the uncertainty over the economic recovery mortgage rates remain at the best levels since late 2013.

The debate also raises the ongoing question as to whether the Fed will continue to taper quantitative easing or whether they leave it in place for a longer period. We may learn more this week from the new Fed Chairwoman Janet Yellen since she is scheduled to testify in front of Congress. However, I don’t believe there is enough mounting evidence for the Fed to alter its course.

Although the year is off to a rocky start economically I still believe the economy is on stable ground for solid recovery. Since rates are currently at multi-month lows and we expect rates to rise this year I will maintain a locking bias.

Current Outlook: locking