Mortgage Rate Update October 3, 2013

Mortgage rates are unchanged from the beginning of the week.  We remain at the best levels since mid-June.

Normally on the day before the first Friday of the month I’d be writing about how tomorrow’s all-important jobs report could impact the direction of mortgage rates.  However, due to the government shutdown the Bureau of Labor Statistics is not open and therefore we will not get the September jobs report.

Speaking of jobs, the Labor Department reported earlier today that initial jobless claims were 308,000 for last week (don’t ask me why the Labor Department is open but the Bureau of Labor Statistics is not).  The 4 week moving average has fallen to 305,000 which is the lowest level since May of 2007.  Over time, good news for the economy is bad news for mortgage rates.

I continue to be asked how the government shutdown is impacting the mortgage industry.  From an interest rate perspective mortgage rates have benefited.  Why?  The concern is that should the government remain closed for an extended period of time it would have a negative impact on the economy which causes rates to fall.

From a process perspective not much has changed.  One potential challenge is that the IRS is discontinued issuing “tax transcripts” which are required for almost all loan applications these days.  Without tax transcripts I anticipate that many lenders will not  fund loans.  As a matter of process Mortgage Trust obtains these documents early in the application process but for lenders that do not I foresee delays.

From a technical perspective mortgage rates appear poised to reverse higher.  I will maintain a floating stance for now but if we do see any sort of a reversal I’ll immediately shift to locking.

Current Outlook: floating