Yesterday, mortgage backed securities had a pretty decent rally following treasuries to lower yields.  We improved yesterday by about .50 in discount which should put lenders par 30 year fixed rate conventional mortgages anywhere from 4.75% to 5% depending on the lender.  Some lenders are offering incentives for clients with over 800 scores and lower loan to values that will put par rates as low as 4.625% today.   Most lenders repriced to the better yesterday but did not pass along all the improvements. 

This morning we got the release of the Non Farm payrolls and it wasn’t pretty.  To read the actual release CLICK ME.  Economists where expecting 648,000 jobs lost and the actual number was slightly worse at 651,000 jobs lost.  December’s numbers where revised worse from 577,000 lost to 681,000 lost, and January’s numbers where also revised worse from 598,000 to 655,000.  Since December of 2007, our economy has lost 4.4 million jobs which is the most since 1949.  With the revisions, the unemployment rate increased to 8.1% which is the highest since 1983 while economists where expecting the jobless rate to come in at 7.9%.  The jobs outlook continues to look very grim.  Usually this is a positive for mortgage backed securities; however, after the release mbs have sold off a little.  With so many people out of work it will be hard for people to make mortgage payments or buy new homes so sometimes data that is usually positive actually hurts.   We have seen a lot of this in recent months which makes the job of predicting rate movements much more difficult.   As investors digest this data it will be interesting to see how the market reacts.  The stock market after a pretty big drop yesterday has just opened in positive territory.  If we have a big rally in the stock market, that will add pressure on mbs to move lower in price which causes rates to increase. 

Early reports from fellow mortgage professionals show that lenders have passed along some improvements.  Today may be a good day to lock loans especially if you are closing this month.  Rates move in a sideways S pattern.  They move higher, top out then go lower and bottom out and repeats.  It seems the top of the range has been about 5% and the bottom around 4.5%.  We are at or near the bottom and yes rates can go lower, however, they can also move higher.  Each time we have approached the 4.5% range, we have been turned back and rates have moved higher.  Everyone wants to lock when rates are at the bottom but the problem with that is you don’t know you are at the bottom until it is passed then it is too late.  I have said many times before that anytime you can lock a 30 year fixed rate mortgage under 5% that is a good move.   Not sure how everyone else feels, but thank goodness it’s Friday!!!!!