Mortgage Rate Update August 5, 2013

Up until the all-important jobs report was released on Friday my alert to lock which was issued on Wednesday looked well timed.  Mortgage rates rose by .125% on Thursday.

However, to my surprise Friday’s jobs report was softer than expected.  Not only did the number of new jobs created for July come in below expectations but the Bureau of Labor Statistics also revised lower the previously released figures for May and June.  All in all the report was interest rate friendly and mortgage rates are effectively unchanged from mid-last week.

If the September jobs report also fails to meet expectations it could cause the Fed to keep quantitative easing (QE) in place at its present pace for a longer period of time.  This would be interest rate friendly.  However, if the September jobs report shows some strength I still believe the Fed will announce their plan to wind down QE at their September 18th meeting.

After a very busy economic calendar last week the events due out this week look fairly light.  Therefore, I expect interest rates to react to technical trading patterns and the stock market.

The technical picture for mortgage-backed bonds (MBS’s) looks promising.  I will recommend a floating position unless MBS prices drop below the 25-day moving average.

A quick housekeeping note: ‘rate update’ will come out on Wednesday again this week and then will be on vacation next week.

Current Outlook: floating