I shifted to a ‘locking bias” last Thursday and that has proven to be a good call as rates have increased by ~.125% from the beginning of this week.
All attention is focused on tomorrow’s all-important monthly jobs report. I think mortgage rates are in a lose-lose situation and therefore am going to maintain my locking bias.
Traditionally speaking, a weaker than expected jobs report is beneficial for mortgage rates and vice versa. However, a weaker than expected jobs report this time around could actually hurt mortgage rates because of how the Fed may respond.
The Fed has indicated that they intend on raising short-term interest rates later this year. Analysts are debating on whether they will begin this process in September, October, or December. The longer they wait the more likely it is that inflationary pressure builds in our economy. Inflation is the enemy of interest rates.
Should tomorrow’s jobs report come in below expectations then it would likely influence the Fed to hold off on raising short-rates. Long-term rates may react negatively to this.
If tomorrow’s report comes in stronger than expected then it could influence the Fed to raise rates sooner. But, it could also signal higher wage pressure which is not interest rate friendly. I recommend locking in ahead of the report.
Current Outlook: locking bias