Mortgage Rate Update November 3, 2014

Mortgage rates are opening up the week heading in the wrong direction.  Thus far, mortgage note rates have not changed but mortgage-backed bonds (MBS’s) are lower which leads me to believe we may see higher rates later in the week.

Mortgage rates are reacting to better than expected manufacturing data released by the Institute of Supply Management.  The report showed the manufacturing sector expanding for a 17th consecutive month.  Good news for the economy is bad news for mortgage rates.

Later this week we’ll get the all-important jobs report.  Current projections are for ~240,000 new jobs created in October.

From a technical perspective MBS’s are currently trading right at the 25-day moving average.  Should MBS’s close below this level we’d expect rates to move moderately higher in this week.  However, the stock market has been on a tear ever since the middle of October and the equity market is ripe for a reversal.  When stocks sell-off it usually helps mortgage rates so we’ll want to keep an eye on this as well.

Current Outlook: neutral