Mortgage Rate Update May 5, 2011

Mortgage rates continue to trend lower despite technical trading patterns that suggest rates are vulnerable to reverse higher.

We knew headed into the week that the three major economic data points of the week all focused on the labor market.  Yesterday’s ADP payroll report showed the US economy created fewer than expected jobs in April.  Today, weekly jobless claims figures showed that the number of people filing for unemployment benefits surged higher when expectations were for a decline.

In response to the news the stock market closed lower yesterday and is following through on that momentum this morning.  Bad news for the economy is typically good news for mortgage rates and mortgage rates have sunk to the best levels since January.

However, tomorrow’s government jobs report carries the most weight of the three data points and history has shown there is little correlation between the outcome of the ADP and the government figures.  Furthermore, technical trading patterns still suggest rates are ripe for reversal.  I say lock ‘em while they’re low!

Current Outlook: locking