Mortgage Rate Update October 5, 2015

In last Thursday’s ‘rate update’ I recommended floating into Friday’s jobs report and that proved to be the right call.  Mortgage rates improved by ~.125% following a weaker than expected employment report.

In case you missed it the Labor Department reported that only 142,000 new jobs were created in September.  Four of the past months have shown job growth below 200,000 and for the past two months below 150,000.  Bad news for the economy is often good news for mortgage rates.

The average hourly earnings declined modestly and was 2.2% higher than a year earlier.  As I wrote about last Thursday the Fed is looking for wages to grow as a signal to begin raising short-term interest rates.

Looking ahead this week the economic calendar is relatively light.  The biggest highlight comes on Thursday when minutes from the last Fed meeting are released.  It will be interesting to see what the Fed is thinking with regard to a timeline for hiking rates.  That said, their previous meeting was prior to Friday’s disappointing jobs report so it’s likely their viewpoint has shifted since.

From a technical perspective mortgage-backed bonds are trading up against technical resistance which means mortgage rates may be as good as they will be in the near-term.  Indeed rates are back at 2015 lows.  I will recommend locking.

Current Outlook: locking bias