Rate Update June 6, 2008

Mortgage rates are unchanged this morning despite a lot of erratic movements in the financial markets.

Headed into the day we knew that the monthly jobs report would be important. Within the jobs report there were a couple measures that likely have traders confused on how to play the markets. First, the report indicated that the unemployment rate rose to 5.5% which was above analysts expectations (good for mortgage rates). This is the highest reading since October of 2004 and the large month-to-month increase in 22 years. You can bet the media will have a “field-day” with this. However, the bottom line is that the report showed the economy lost less jobs than were expected (bad for mortgage rates).

Overall the report shows continued weakness in the nation’s job market which would ordinarily be a good sign for mortgage rates. However, overshadowing this news is the fact that oil prices have soared in the past two days again raising inflationary concerns. This is certainly bad for mortgage rates and so we continue to favor a locking stance.

Current Outlook: locking