Mortgage rates are modestly better this morning.
The markets were eagerly awaiting this morning’s ADP private sector jobs report for reasons outlined in yesterday’s ‘rate update’. Most analysts were expecting robust job growth last month due to an improved economic outlook and hiring for the census.
The report disappointed however, showing that the private sector shed 23,000 jobs last month. The results should be taken with a grain of salt as the ADP report is notoriously volatile. However, it should also be noted that a recovery in the jobs market is likely to be slow.
Bad news for the economy is often good news for mortgage rates but the mortgage-backed bond (MBS) market is flat on the day. All eyes are focused on Friday’s jobs report. Given that the ADP report came in shy of expectations money managers are less likely to unload MBS’s headed into Friday so rates should remain stable.
Lastly, today marks the end of the Fed’s subsidy of mortgage rates which began in November of 2008. Mortgage rates have yet to move higher but I feel it is only a matter of time.
I continue to think a long-term locking strategy is best.
Current outlook: locking bias