sorry for yelling.


Mortgage rates ended the previous week just above record lows. The best mortgage rates were offered on Tuesday afternoon and Wednesday morning. Lenders were quoting par rates below 4.25% for a brief time.

The week ahead isn't exactly jam-packed with data, in fact there really isn't all that much on the calendar, but that doesn't mean the market isn't paying very close attention to what data is being released. It's all about quality rather than quantity this week.  The most influential economic report of the month hits newswires on Friday: The Employment Situation Report

From the Week Ahead:

Economists polled by Reuters currently believe the report will show the labor market was flat in September after 54k jobs were lost last month. Private employment is expected to have risen by more than 80,000, but that increase was offset by the expiration of temporary Census jobs. “The labor market evidence continues to point to job creation, but at a slow pace,” said economists at IHS Global Insight. “We expect headline employment to fall 5,000, as more than 70,000 temporary Census workers were released in September. This is the last time that Census layoffs will distort headline employment, because only 6,000 temporary Census workers remained in place as of mid-September.”

The Unemployment Rate, currently at 9.6%, is expected to remain put or rise by one-tenth. “We forecast that the unemployment rate rose to 9.7% during the month from 9.6% previously,” said economists at Nomura. “Our call reflects both our expectations for weak job growth and also a forecast of healthy labor force gains.”

Also, the BLS will release an estimate for annual benchmark revisions to the prior year of data.  “Last year at this time the BLS announced a tentative 824k downward revision to the level of March 2009 payrolls, the biggest ever,” Deutsche Bank noted. “The fact the economy has been growing over the past four quarters — it grew 3.7% in Q1 2010 — suggests to us the preliminary benchmark revisions announced by the BLS next week will be positive.”



Investors generally act in a more defensive manner before this report is released because labor market data holds the potential to alter long term outlooks and investment strategies. Rate watchers should be on the alert for increased amounts of bond price volatility.  This is a factor of fewer market participants actively investing their funds in the marketplace (lack of liquidity). This implies we might be sending a few more loan pricing alerts than normal in the days ahead.

Loan pricing improved today, cheapening up closing costs a few basis points. Most lenders offered lower consumer borrowing costs on their first release of loan pricing. Some were a little more apprehensive early in the morning. These lenders ended up repricing for the better.

Overall, the best par 30 year fixed mortgage rates remain in a range between 4.25% and 4.50%.  We are seeing a greater number of lenders quoting rates below 4.25% today vs. Friday, but this is not broadbased behavior. The best par 15 year mortgage rates are in a range between 3.625% and 3.875%. Originators will only be able to offer these rates to borrowers who have perfect credit profiles and enough equity in their home to qualify for a refinance. If the terms of your loan trigger any risk-based loan level pricing adjustments (LLPAs), your rate quote will be higher. If you do not fall into the "perfect borrower" category, make sure you ask your loan originator for an explanation of the characteristics that make your loan a riskier investment.

MBS are currently at the high side of our price range. We've always advised locking when MBS are at the top of our price range. This range has proven to be a reliable lock/float indicator. If you are able to lock in your loan, we think today is great day to do so. If you are unable to lock in your loan today, don't worry...

While we do not yet see a reason to believe mortgage rates will dip below the record lows offered by lenders last week, we do expect the uncertain economic environment and the potential for Federal Reserve quantitative easing to keep mortgage rates in a very aggressive range for an extended period.

If you are a consumer looking to refinance your loan, we recommend you submit a loan application as soon as possible. This will ensure you are capable of locking in your borrowing costs if mortgage rates touch record lows again. Remember these below market quotes have only been offered for a short period of time,  so you must be ready to lock when lenders push rates to record lows.

The "best executed" lock/float strategy comes down to finding an originator who knows the loan market, studies underwriting guidelines, and just plain old gets the J.O.B done.  You have to let the loan officer earn their commission. That's how you "ride the float boat" in this environment...make sure you have a damn good skipper. Plain and Simple.