This morning we had the release of non farm payrolls and unemployement numbers. First of all the non farms payroll came in a little worse at a loss of -84,000 vs expectations of a -75,000 loss, and the prior 2 months numbers were also revised to show a bigger loss of jobs. The unemployement rate was expected to come in at 5.8%, but it shot up to 6.1%. Both of these reports are very favorable for MBS, but with the big rally we have seen this week they may not spark a huge rally but should solidify the gains we have seen and prevent any sell off. Remember, bad news for the economy generaly equates to lower interest rates on a mortgage.
During the last couple weeks, we have seen rates on a 30 year fixed mortgage fall from the low 6's to now in the upper 5%, so for today floating appears to make a lot of sense. But as always you need to evaluate your time horizon. If you are closing within the next week, locking will take all risk out of the equation and you will pocket the winnings. For closings more then a week away floating still appears to be the way to go. We are still expecting at some point to give back some of what we have gained this week. We do feel it will be temporary and the longer term outlook should lead us towards lower rates.
We will get back to you if market reaction requires us and as always you can click the link at the top of this page to access the professional blog.