In A Word:

Although rates were at risk of getting worse this morning, the forces that move rates behind the scenes have turned positive which should lead rates, by the end of the day at least, to be the same as yesterday's.  Keep in mind that as the bonds that back mortgages (Mortgage Backed Securities) trade throughout the day, it can cause lenders to change their interest rates, so things may change, but for now we are good.

To Lock or Float?

This is still a tough call as we have the most potential for changes yet to come this week.  We are still in the middle ground of historical ranges so rates should either go up or down and are likely not comfortable holding steady.  With the general trend over the past week being down, locking is the safe play.  In general, weak economic data leads to lower interest rates, as long as inflation is absent.  So if you are confident in much weaker than expected data to come, floating your rate may pay off, but perennial wisdom dictates you are much less likely to regret a decision to lock in times like these than you would be if you floated and lost. 

The Numbers:

Yet again, 30 year fixed interest rates should be available in the high 5% range to the low 6% range for the best-qualified borrowers.

The News:

  1. Factory orders

Driving markets today in terms of scheduled economic reports is the Factory Orders report, which is just that.  The more that factories are ordering, the stronger the perception of the economy, which tends to be good for stocks and bad for bonds.  Even though this report came out today stronger than expected, it did not have a major impact on rates, and the little impact it did have has since reversed.  Since there is no other relevant data for today, traders will look for their clues elsewhere, such as the stock market and news headlines.



On Tap For The Rest Of The Week



    - ADP EMPLOYMENT REPORT, this measures job growth or loss in the private sector and is not given nearly as much credence as Friday's report

    - PRODUCTIVITY AND COSTS Report.  This report speaks to inflation conditions.  The higher the labor costs are, the higher the indication of inflation, which is bad for mortgage rates.

    - Non-Manufacturing Index, which measures business expansion or contraction in non-manufacturing industries.  Worse than expected can be good for mortgage rates.

    - Oil Inventories.  This does not directly affect mortgage rates, but if oil is significantly more or less plentiful than expected, it will effect crude oil prices which seem to have a much greater than normal effect on markets these days.  If this report causes stocks to rally, it could hurt mortgage rates.


    - JOBLESS CLAIMS, which is a weekly report of how many new applicants have come forward for unemployment benefits.  The more jobs lost, the better for mortgage rates.


    - EMPLOYMENT SITUATION.  This is a hugely important monthly report that tracks "non-farm" payrolls which is the most closely watched indicator of the labor market.  The lower the number, the better for rates.


Today's rally in the mortgage market is a reassuring sign in the face of stronger than expected data, but it is no guarantee of tomorrow's movements. We are still in the "middle ground" between the recent historical highs and lows of mortgage rate trading ranges.  This is dangerous because we were near the highs (highs in price that is, which means low rates) last week which can cause the risk that we will have to regress to the lows to be higher.  Still, we are basically looking for weak economic data.  If there is little enough economic activity and weak enough employment numbers, it can lead to improving mortgage rates this week.  But it could go either way.  The safe bet is always to lock if you can live with today's rate.  If you are convinced the data will be weak, floating is a gamble that may pay off.