Fixed Mortgage Rates are even with yesterday.
This mornings job report is in and shows that the economy lost 663,000 jobs in March…bringing the grand total of jobs lost for the entire recession starting December 2007 to 5.1 million. Hopefully some of those 5.1 million people who lost their job have been able to find another job. The job loss number for March was in line with expectations and still better than January’s numbers…hopefully this means that the worst of the job losses are behind us.
As you know, the Fed has been buying up Mortgage Backed Securities for some time now. Last week (March 26th – April 1st) they purchased $32billion of them. The important thing to understand here is what types of Mortgage Backed Securities they are purchasing. It was reported that none of the bonds purchased were 3% or 3.5% coupons…which relate to interest rates of the 4.5% range. This makes me believe that interest rates aren’t going to be getting too much lower than they currently are. If the Fed continues to purchase higher coupon bonds, such as the ones in the 4.5% range, there is a better chance that we will see rates stay around 4.75%-5%.
Currently Mortgage backed bonds are trading right up against the 25 day moving average, if they can hold we may see some rate improvement over the next week or so. On longer term deals I am going to switch to a floating stance, but on short term deals that will close in the next couple weeks, I would say go ahead and lock in now.
Current Outlook: floating long term, locking short term