Mortgage rates have opened up slightly better this morning.
Domestic economic data is driving the interest rate markets this morning. The Labor Department reported that the number of people filing for jobless claims fell to the lowest level in 4 years last week. Normally good news for the economy is is bad news for mortgage rates. However, in the same release the Labor Department revised the previous weeks figure by 16,000.
In a separate report the Commerce Department confirmed that the US economy grew by 3.0% in the 4th quarter. Analysts had been expecting a revision higher to 3.2% so it came in below expectations. Furthermore, the report showed that company profits declined by .5% on an annualized basis from the previous quarter. This has the markets concerned that companies will be slow to hire more workers and/ or invest in new equipment which could trip up the economic recovery.
Uncertainty over the economic recovery is good for interest rates. Some investors now believe that the Fed is more likely to engage in another round of monetary stimulus (AKA ‘quantitative easing’) with the goal of keeping the recovery on track.
After increasing by about .25% following the Fed’s last monetary policy statement two weeks ago rates have recovered by about .125%. I still believe this is about as good as it will get. I will maintain a locking bias.
Current Outlook: locking bias