Mortgage rates held surprisingly steady despite a strong employment headline.  The big jobs report came out today, and it showed payroll creation at 265k versus forecasts calling for only 170k jobs.  This is a substantial "beat," and the sort of thing that would typically send rates screaming higher.  The fact that rates didn't scream higher is very telling.  It suggests investors aren't merely willing to buy the bonds that help rates move lower, they're flat-out looking for opportunities.  

This is something of a game-changer in terms of how cautious we need to be when considering a big bounce back in rates.  It doesn't guarantee immunity from a move higher, but it removes the most immediate threat.  At this point, there are a few ways to proceed if you're considering locking.  The first approach would be to simply lock because rates are right on top of all-time lows.  There's nothing wrong with that.  The other approach would be to set a limit for how much worse things would have to get before you lock to avoid further losses, and then to readjust the level of that safety net if rates continue lower.

Loan Originator Perspective

"After a better than expected jobs report on paper today, we watched how little of an impact it had on rates and pricing. Even with the small pull-back the last few days, one would probably lean towards floating for the time being until we see any resistance in the market to tell us otherwise." -Ira Selwin - VP of Capital Markets at US Mortgage Corporation

"With bonds opening up weaker ahead of the jobs report, rate sheets today were slightly worse.  Since the data hit, bonds have managed to regain all losses and then some.  With MBS in the green and today being a Friday, I favor floating all loans over the weekend." -Victor Burek, Churchill Mortgage

"Today we started the day with bonds weaker than Thursday, we had an employment # that smashed the expectations, and bonds found there way to close better than yesterday, very telling.  Says a lot about how secondary domestic data has become.  Until we see a shift in international economic sentiment, it's safe to say rates aren't rising outside of brief organic trading corrections.  I would float into next week." -Constantine Floropoulos, VP, The Federal Savings Bank

"Surprisingly, the stellar June jobs report (aka NFP) easily surpassed expectations, but bonds barely blinked.  My pricing is virtually identical to yesterday's, and MBS even rallied from small losses to equally small gains by mid PM.  This seemingly incongruous movement is an indication of what we've previously said:  US rates aren't just about US data anymore, global economies matter.  While it's too early to say our down trend is continuing, idling in place is fine, for now.  No hurry to lock on my end, let's see where this goes!" - Ted Rood, Senior Originator

Today's Best-Execution Rates

  • 30YR FIXED - 3.25-3.375%
  • FHA/VA - 3.25%
  • 15 YEAR FIXED - 2.75%
  • 5 YEAR ARMS -  2.75 - 3.25% depending on the lender

Ongoing Lock/Float Considerations

  • Markets had been primarily concerned with the timing of the Fed's second rate hike (after they first hiked in December 2015)
  • The possibility that the U.K. would vote to exit the European Union (Brexit) has since taken over as the biggest flashpoint for markets. 

  • The Fed freely admits it didn't hike in June because of this and because it wants to be sure that jobs numbers aren't taking a bigger turn for the worse.  Mortgage rates moved farther into 3-year lows as a result.
  • Brexit happened and rates rejoiced.  Lock if you like what you see.  The longer term trend remains positive regardless, but periodic corrections toward higher rates continue to be a risk. 
  • As always, please keep in mind that the rates discussed generally refer to what we've termed 'best-execution' (that is, the most frequently quoted, conforming, conventional 30yr fixed rate for top tier borrowers, based not only on the outright price, but also 'bang-for-the-buck.'  Generally speaking, our best-execution rate tends to connote no origination or discount points--though this can vary--and tends to predict Freddie Mac's weekly survey with high accuracy.  It's safe to assume that our best-ex rate is the more timely and accurate of the two due to Freddie's once-a-week polling method).