Mortgage Rate Update January 9, 2013

Mortgage rates improved Monday-Tuesday this week before reversing course yesterday.

As I mentioned on Monday this week is all about the jobs report which is due out tomorrow from the Bureau of Labor Statistics. Yesterday’s employment report from the private payroll company ADP showed that the US economy added 238,000 jobs in December. This is more than was forecast and increases the likelihood that tomorrow’s report also comes ahead of expectations. If so, I expect upward pressure on mortgage rates.

Also out yesterday were the minutes from the last Fed meeting which took place on December 17th-18th. If you’ll recall the Fed announced that they would taper bond buying, known as quantitative easing, to the tune of $10 billion this month but they did not provide clarity on tapering from this point forward. It’s clear in the minutes that the committee in charge of monetary policy is beginning to shift its focus away from economic stimulus and more toward protecting the economy from inflation and possible asset bubbles that can form in an easy policy environment. This is not interest rate friendly.

Another reason why I see the possibility of tomorrow’s jobs report showing strength is that figures released today by the labor firm Challenger, Gray & Christmas showed the fewest number of jobs cuts in over 13 years for the month of December. Grant it, lack of job cuts does not necessarily translate to new hiring but its still positive news for job seekers.

I am going to recommend a locking stance headed into tomorrow’s jobs report.

Current Outlook: locking