Mortgage rates are unchanged from Friday but appear vulnerable so we need to be cautious.
It’s a quiet news day today but the economic calendar will heat up later in the week. It’s jobs week which means ADP’s private payroll report comes out Wednesday, weekly jobless claims on Thursday, then the all-important Bureau of Labor Statistics report this Friday. Current market expectations call for ~220,000 new jobs.
The chart below shows mortgage-backed bond (MBS) prices since the beginning of the year. Over that timeframe mortgage rates have improved by ~.50% (mortgage rates improve when MBS prices rise). Half of that has come in the last 5 weeks.
From a technical perspective mortgage rates look vulnerable. As you can see MBS prices are currently trading at the lower end of the upward trending range. Should prices break below this barrier it could signal a reversal in the overall direction of rates.
I would be surprised if mortgage rates made a decisive “break-out” in the days leading up to a new monthly jobs report. Therefore, I will recommend floating to see if rates can catch support.
Current Outlook: floating