Mortgage rates are mostly better from last week. How long can this improvement in rates last given that it is happening against a backdrop where most analysts are calling for rates to worsen in the long-run?
Stocks have lost about 5% since the middle of the month as fears mount over the health of emerging markets and the spillover effect it may have on our economy. Bad news for stocks tends to be good news for mortgage rates.
This week’s economic calendar is a busy one. This morning we got the latest manufacturing index from the Institute of Supply Management. The report showed activity was slower than expectations. Later this week we get the ADP payroll report (Wednesday), initial jobless claims ( Thursday), and the all-important jobs report (Friday).
You may recall that last month’s jobs report was a stinker (+74,000 new jobs) and since then mortgage rates have improved by ~.25%. The US economy is forecast to add about ~2.4 million jobs in 2014 which averages out to 200,000 per month. Expectations for this upcoming report is for +175,000 new jobs. Another miss would pose serious questions about the health of the economic recovery and likely push rates another .125% lower. However, let’s not be caught off guard if the report comes in as expected AND figures for the last report are revised higher. This would almost certainly cause rates to rise.
‘Rate update’ will be on vacation this Thursday so there will not be another update until Monday, February 10th. I tend to focus on the fact that rates are better than we expected thus far in 2014 therefore I would recommend locking in before the jobs report.
Current Outlook: locking