Mortgage Rate Update January 8, 2015

Mortgage rates are essentially unchanged from Monday and remain near all-time low levels.

US stocks are trading sharply higher this morning as oil prices stabilize.  In the past month oil prices have declined by ~50%.  Traditionally this has been seen as good news for the US economy because it allows households to spend less on gas and more in other sectors.  However, the US economy is also tied to oil production thanks to the rapid technological gains in fracking.  Therefore, lower oil prices also represents a threat to our nation’s economic health.  The stock rally has caused mortgage rates to worsen moderately but rates are not going to make a decisive move with tomorrow’s all-important jobs report looming.

Tomorrow the Bureau of Labor Statistics will release the monthly jobs report.  Expectations are that ~235,000 new jobs were created in December.  We normally don’t track the unemployment rate on this blog but we’ll need to start paying attention there.  The Fed defines “full employment” when the unemployment rate reaches 5.5%.  The unemployment rate is currently 5.8%.  Should it continue to trend lower it could force the Fed’s hand in raising short-term rates.

The monthly jobs report is always hard to forecast.  Mortgage rates are currently ~.25% lower than they were 3 weeks ago so I will recommend a locking bias.

Current Outlook: locking