Mortgage Rate Update February 3, 2011

Mortgage rates are priced worse for a 3rd straight day.

I thought mortgage rates would rebound in response to technical trading patterns yesterday but the rate markets continue to inch higher.  We are still inside the 6-week trading range which is encouraging but with the jobs report due out tomorrow it’s always a big risk.

Speaking of jobs, this mornings jobless claims figures were lower than expected which is a good sign for the economy.  In addition, worker productivity came in higher than expected at 2.6% which is a good sign for inflation and interest rates.  If we take a closer look at worker productivity growth over the past 5 years we find that it spiked when we entered the recession as companies laid off workers and asked existing employees to do more.  The fact that productivity is declining since the end of 2009 tells me that companies will have start hiring new workers if they want to boost production.  Could this be an indicator for future employment reports?  We’ll find out tomorrow.

Other economic data out today also showed better than expected economic activity.  This is a good sign for our economy but bad sign for mortgage rates.  Tomorrow is the all-important jobs report.  Expectations are for 140,000-160,000 new jobs created.

It’s always a risk floating into this report but if you believe that rates will remain inside this range it would make sense to float.  If you think the economy is truly on the mend then you might take your medicine today and lock.

Current outlook: tough call headed into jobs report, I’ll flip a coin…..tails= lock