Mortgage Rate Update March 7, 2016

Although mortgage note rates are unchanged from last Thursday pricing at these rates slightly worse.

Friday’s jobs report topped analysts’ expectations coming at +242,000 new jobs for the month of February.  Furthermore, as I thought may happen, previously released figures for December and January were reported higher.  As expected, mortgage rates worsened moderately following the better than expected results.

This week’s economic calendar is very light.  The highlight will come on Thursday when Europe’s Central Bank (ECB) meets.  Investors expect the ECB will lower short-term rates even further in an effort to boost liquidity into their economy.  As a reminder, the ECB’s current target rate is in negative territory which means they are actually charging banks to keep money on deposit.  Low rates overseas have helped keep rates low here in the US.

From a technical perspective we are keeping a close eye on the US 10-year treasury yield.  It is currently trading at 1.90% which is ~.20% higher than where we stood a couple weeks ago.  During that time mortgage rates have risen by .125%.

03-07-16-chart of yield mortgage rates portland ore

Should the yield break above this level it will likely creep higher by another ~.20% and we could expect mortgage rates to increase by .125%-.25%.  However, this level could also cause yields to reverse and trend back down.  If that happens I would expect mortgage rates to improve by ~.125%.

It’s a tough call.  I am going to shift my outlook to cautiously floating.

Current Outlook: cautiously floating