Mortgage Rate Update December 1, 2016
Mortgage rates have worsened modestly this week.
On Monday I had recommended a ‘floating’ position with the hopes that the yield on the US 10-year treasury would respond to technical trading patterns and reverse below 2.38%. Pricing on mortgage rates did improve Monday-Tuesday but starting yesterday rates have worsened.
The yield on the US 10-year treasury is now up to 2.46% and mortgage rates have worsened by .125% in response.
Tomorrow we get the last all-important jobs report for 2016 (and the last one prior to the next Fed meeting). The markets are currently expecting +180,000 new jobs added during the month of November. Not coincidentally the average monthly job growth from January-October 2016 has been +181,000.
Aside from watching the number of new jobs added analysts will be keeping a close eye on average hourly earnings. In last month’s report average wages increased by 2.8% compared to the year prior which represented the largest increase since 2009. Should wages continue to press higher it would raise concerns about wage-based inflation. Inflation is the primary driver of mortgage rates.
From a technical perspective the damage of not locking Monday-Tuesday has been done. I am going to maintain a floating bias.
Current Outlook: floating