Mortgage Rate Update October 5, 2011

Mortgage rates are worse this morning.

Sentiment over the Euro-zone debt crisis is very similar to a yo-yo these days.  For a couple days investors are pessimistic about the outcome which drives a “fight-to-safety” and pushes mortgage rates down to all-time low levels.  Then, a rumor or headline will cause the yo-yo to rise and lift outlook for Europe.  This causes rates to reverse higher.  After touching all-time lows on Friday and Monday the yo-yo is heading higher again.

Interest rates are also being pressured higher by better than expected economic data this morning.  The private payroll company ADP released it’s version of the monthly jobs report today and it showed more jobs added in the economy last month than was expected. History suggests that this report has little correlation to the outcome of the all-important government version which will be released on Friday.

For now rates appear to by flying higher but interest rates have been cyclical over the past few weeks.  I won’t be surprised to watch rates move higher over the next 48 hours.  Should they reverse back to all-time lows then I will definitely recommend locking because rates have yet to break below this level.

Current Outlook: locking in near-term, neutral long-term