Although mortgage note rates are unchanged from the last ‘rate update’ the pricing on rates is worse. The bond market is closed today in observance of Columbus Day.
Friday’s all-important jobs report was bit of a mixed job. Despite the fact that the economy only added 114,000 new jobs the unemployment rate ticked down to 7.8% which is the lowest level since January of 2009. The number of new jobs reported was in line with expectations and relatively tepid when viewed on a historical scale. Therefore, the sharp decrease in the unemployment rate was a surprise and begs the question as to whether conditions in the labor market are improving OR if the unemployed are discontinuing their job search. Initially mortgage rates worsened on the lower than expected unemployment rate but I wouldn’t be surprised to see that reverse this week.
There is growing concern on Wall Street that the US economy may be heading for a mild recession that would hit late this tear or early next. A negative outlook for the economy often helps to drive rates lower.
Onlookers of the European debt crisis are increasingly focused on Spain. As European finance officials prepare to meet mid-month many analysts believe the Spanish Government may make a formal request for bailout funds. As long as there is significant uncertainty about the fiscal stability of the Euro-zone US mortgage rates will remain relatively low.
I don’t believe rates will continue to worsen so I would recommend floating for better pricing later this week or early next.
Current Outlook: floating bias