Rate Update January 7, 2010

Mortgage rates are priced modestly worse compared to yesterday.

The US Treasury has announced the auction schedule for next week and it is basically in line with expectations.  Bond supply will likely be an important topic throughout 2010 as the US Government finances the projected $1.5 trillion budget deficit.  The additional bond supply is likely to have a “crowding out” effect where non-treasury debt is forced to pay higher yields in order to attract buyers.  Included in this group are mortgage-backed bonds and hence mortgages.

Tomorrow brings the all-important jobs report (click here to understand why this report is so significant).  Analysts are currently expecting job growth to the tune of 10,000 new jobs in December.  This would mark the first time the US economy has experienced employment growth in two years.  It would take a real stinker in order for rates to be pressured lower.  We are going to recommend a locking position.

Current outlook: locking