Mortgage Rates Drop To 2-Month Lows Before Important Jobs Data

Mortgage rates continued moving significantly lower today, extending a rally that brought them to their best levels in a month yesterday.  Because of the reasonably narrow range before that as well as size of today’s move, rates are now in line with their lowest levels since late January!  Best execution (what is this?) rate for 30yr Fixed loans is arguably moving to 3.5% among the most competitively priced lenders.  Even at 3.625%, most lenders are charging significantly lower costs (or offering more rebate, depending on the scenario) today vs yesterday.  

The improvements today were primarily fueled by yet another weaker-than-expected employment report.  Yesterday’s rates benefited from weaker employment readings from ADP (the payroll services company, who puts out a monthly tally of new private payroll creation) and ISM (the Institute for Supply Management, who puts out monthly reports on business conditions in Manufacturing and Services sectors, including an employment index for each).  Today’s data was the weekly Jobless Claims report, which showed first time unemployment filings rose more than expected last week.

In and of themselves, these numbers don’t guarantee that tomorrow’s all-important Employment Situation Report will be weaker than expected, but they do serve to skew the consensus.  If labor markets are weakening, rates tend to move lower.  If markets see reason to believe that tomorrow’s report will be weaker than expected, they will begin trading for that possibility in advance.  This is the most salient phenomenon at work today.  A continuation of the “good times” over the past few days is heavily dependent on tomorrow morning’s data results, which could have the biggest impact yet, either carrying rates toward their lowest levels of the year or undoing much of the recent improvement.

Mortgage rates continued moving significantly lower today, extending a rally that brought them to their best levels in a month yesterday.  Because of the reasonably narrow range before that as well as size of today’s move, rates are now in line with their lowest levels since late January!  Best execution (what is this?) rate for 30yr Fixed loans is arguably moving to 3.5% among the most competitively priced lenders.  Even at 3.625%, most lenders are charging significantly lower costs (or offering more rebate, depending on the scenario) today vs yesterday.

The improvements today were primarily fueled by yet another weaker-than-expected employment report.  Yesterday’s rates benefited from weaker employment readings from ADP (the payroll services company, who puts out a monthly tally of new private payroll creation) and ISM (the Institute for Supply Management, who puts out monthly reports on business conditions in Manufacturing and Services sectors, including an employment index for each).  Today’s data was the weekly Jobless Claims report, which showed first time unemployment filings rose more than expected last week.

In and of themselves, these numbers don’t guarantee that tomorrow’s all-important Employment Situation Report will be weaker than expected, but they do serve to skew the consensus.  If labor markets are weakening, rates tend to move lower.  If markets see reason to believe that tomorrow’s report will be weaker than expected, they will begin trading for that possibility in advance.  This is the most salient phenomenon at work today.  A continuation of the “good times” over the past few days is heavily dependent on tomorrow morning’s data results, which could have the biggest impact yet, either carrying rates toward their lowest levels of the year or undoing much of the recent improvement.

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This entry was posted in Banks, Economy, Finance, Fixed Rate Mortgage, Foreclosure, Foreclosure Crisis, Money, Mortgage, News, Real Estate, Refinance. Bookmark the permalink.

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