Why You Might Want To Lock Your Rate Before Tomorrow’s February Jobs Report

Locked & Chained photo © 2008 Bala | more info (via: Wylio)Let’s get one thing straight here. A slow down in layoffs is not the same as hiring. On the heels of today’s “surprise” decline in Weekly Initial Unemployment Claims, the bond market started the day worse, and mortgage rates are up incrementally.

As much as I want the economy to improve (hint – just as much as you do, I promise, and I do believe it will) I have deep concern about the employment outlook. If the markets wish to interpret this as significant momentum in the labor markets, it certainly helps set the tone for tomorrow’s big release, the February Jobs Report.

With the data received the past two days, and the fact that the bond market has just stalled out after a two week rally, the safe bet is to lock your loan here, today. The Jobs Report will be old news in the bond markets by the time most people in the Bay Area wake up tomorrow.

Wah-waaaa… (insert rant)

I hate to get all Debbie Downer here, but I am not as comforted by the jobs data. Yes, great that the hemorrhaging has stopped. US corporations have already cut to gristle, are operating on lean and mean budgets, and sitting on cash. The President recently asked businesses to spend some money on growing their businesses, and the free markets camp laughed in his face. Politics aside, it sheds light on pro-business mentality. The private sector is where the hiring needs to happen.

Have you seen the chart showing the scope of jobs lost during this Great Recession, and the time lapsed while the labor market attempts to recover? Allow me… We are deep inside the belly of this beast. If the economy is a ship on the verge of sinking, 180k new jobs (tomorrow’s forecast) hardly bails out the water that came on board since the last report. It’s going to take a very loooong time to dry out creating jobs at this pace.

I fear a turbulent, undulating ground beneath a thin stable layer on the surface of this economy. People get tired of being down, of not spending, of cutting budgets over and over. When this happens, collectively, we get a string of less negative data in retail spending, things like that. Enough of these reports, and people might think we’re crawling out of this mess. And the funny thing is, if everybody think’s we’re crawling out of this mess, they’ll really start spending money again, and companies will start hiring again, and we’ll crawl out of the mess. But we can’t go spending money we don’t have. That’s how we created the mess. False confidence. We have to earn it, and we’re still repairing the damage done from the last time.

Let’s get back to the Jobs Report

Are you working on a purchase or refinance transaction? Simply put, I think there is more risk in floating than in locking into tomorrow’s February payroll and unemployment data, aka ‘The Jobs Report’.

Mortgage rates are heavily influenced right now by jobs data, the pace of new job creation being a key indicator of economic growth prospects. The more jobs created, and the lower the unemployment rate, the better the economic outlook, and the higher rates will head. Too few jobs created, and bond markets have fuel to rally, and rates should move lower.

Conditions Heading Into The Jobs Report

On Wednesday, ADP released it’s February report. This one is the precursor to the Bureau of Labor Statistics report. It showed 217k new jobs in February. Economists estimate that roughly 125k-150k new people enter the job market each month, as graduates, immigrants, etc. So the 217k new jobs represented about 80k jobs for previously unemployed people. This is not inspiring job growth. Bond markets didn’t find it too eventful either way, and rates moved slightly lower on the day.

The Bottom Line

After a period of increasing economic optimism, like kryptonite for the bond market, we’ve just seen two full weeks of bond market rally, causing rates to grind lower. Two weeks is a long time to go in one direction only, and at some point, the direction must be questioned, tested, corrected. Heading in to tomorrow’s February Jobs Report, a correction has already begun. There’s a bias in the direction of higher rates, and I think it will take a huge miss on the headline number tomorrow to cause bonds to rally.

I see three basic outcomes to the report tomorrow:

Strong report; rates higher
Report matches expectations; rates higher on ‘confirmation’ of belief
Weak report; rates moderately lower

As was the case last month, I think it will take a real disaster of a report to pull rates lower. The turmoil in the Middle East has helped shake up the recent string of confidence-building economic reports, but Wednesday’s ADP report and today’s continuing claims report indicate tomorrow’s data will have the material for a positive spin. Again, a mildly strong report could be all it takes to bump rates into then next updraft. The sensitivity remains in that direction.

Of course, I could be totally wrong. But why risk it? Rates are right near their historical lows, money is cheap. Don’t let it slip out of your hands. Play this one safe.

If you feel like you could use some help navigating your upcoming refinance or purchase transaction against the trickle of economic data points, contact me and let me know about it.

How Often To Mortgage Rates Change? (Feb 2011 update)

Number of mortgage rate sheets per day through February

One of the things that can be difficult about shopping for a mortgage, or for a mortgage provider, is that as you make contact with a few people and ask about rates, the ground is shifting beneath your feet.

Call one lender first thing in the morning, email two others at lunch, one of whom doesn’t reply until the end of the day, and you’re looking at three different ‘vintages’ of rate quote. Can a fair comparison be made?

Maybe.

But you’ll need to know first if rates have changed over the course of the day. And based on recent history, odds are you’ll be comparing apples and oranges. Ok, to be fair, oranges and bananas.

But when it comes to mortgage quotes, the little differences can be meaningful. If you want to maximize your shopping results, you need to make sure you are comparing quotes from the same vintage.

Rates changed ever 2.71 hours in February

In February, there were 19 bond trading days. We received 49 rate sheets over those 19 days, or an average 2.58 rate sheets per day. We had a few calm days with only one issue of rates, and the most extreme day had 6 different rate sheets. That was the 1st of February, a holdover from a more volatile January.

Most lenders have open lock desks for 8 hours a day. Some are open for 9, and the most aggressive lenders, often the most sensitive to bond market fluctuation, accept rate locks for about 6 or 6 1/2 hours a day. On turbulent bond market days, they often delay the first rate sheet release.

Assuming an average of 7 hours for an open lock desk, and 2.58 rate sheets per day, that means rates changed every 2.71hours. Compared to January’s average expiration of 2.29 hours, that’s 18% less volatility for February.

Only A Partial Picture

Lower volatility is a good thing. It takes some anxiety out of the process for working through a purchase or refinance transaction, and it also tends to give lenders added confidence to be competitive, rather than constantly bracing against potential mood swings in the market.

But volatility only provides part of the picture. During the month of February, mortgage rates went on an epic losing streak – rising every day for nearly two straight weeks. That is a rare move, and it was not a small one. Even the most prominent market rate surveys couldn’t keep up.

Luckily, it was followed by a nearly reciprocal rally that pulled rates back down. And we’re still riding that trend. So while volatility day-to-day was down, the magnitude and range of overall rate movement was larger in February than it was in January.

Never a dull moment around here…

How to stay in front of it

First, make sure you get your rate quotes in the same vintage. This means that any lender who isn’t quick to reply isn’t really helping out. Second, make sure your lender is tuned in to the economic calendar, so that you can be aware of what days are more or less likely to be volatile ones. Working with them to create a lock and pricing strategy suitable for your transaction will probably shed some light on who you’re working with, and serve you far better in the long run than comparing oranges and tangerines.

Need help with a rate lock strategy? Contact me below and tell me how I can help.

Geopolitical Events Pound Rates Lower

Fitz globe photo © 2008 http://maps.bpl.org | more info (via: Wylio)Civil unrest in any part of the world – if it gets enough momentum – can freak out global financial markets. Civil unrest can grind economies to a halt, and can have unpredictable ripple effects that bring that problem to other areas. Take a look at what’s going on from Egypt to Tunisia to Libya.

You might remember that I previously discussed the significance of geopolitics as an influencer of mortgage rates.

Global investment capital, always in some state of flux between asset classes, tends to swarm into safety assets when the geopolitical concerns bubble up like this. Bond investments, especially those based in US Dollars, often benefit from these mood swings.

This includes Mortgage Bonds and US Treasuries. When these instruments receive surges of investment, their value increases, borrowing rates go lower. This is what we are seeing presently, with the recent flare-up in Libya causing bond markets to lurch higher yesterday after the long weekend of events.

What’s a little tougher to decipher is the contrast the Libya events have had to the Egypt timeline. Mortgage rates were on a two week run higher until about a week and a half ago. This was in the face of the events as they were unfolding in Egypt. It seemed that during that span, there were too many domestic economic reports showing indications of improving conditions with the economy. Things that provide signals on inflation, consumer confidence, unemployment, and GDP also have a big influence on the bond markets, and on mortgage rates. Sometimes, bigger than a revolution.

But there was no “good” yesterday today to overcome the gravity of geopolitical events that built up over the long weekend. Rates started out lower than the previous day, and charged that direction with confidence all day.

The mood changes as the global events unfold. And this is the living and breathing, dynamic nature of markets.

SF Supervisor Sends The Bank “Jingle Mail”, Oakland Mayor Takes A Pay Cut

door key photo © 2010 woodley wonderworks | more info (via: Wylio)What do you make of this? San Francisco Supervisor Malia Cohen has entered strategic default, allowing her home to be foreclosed on not necessarily because of hardship with making the payments. It’s referred to as “jingle mail” to euphemistically represent the idea of sending your keys back to the bank by mail. The article doesn’t mention whether she demonstrated that level of courtesy.

I am sensitive to the times we live in. There is financial wreckage all around us, I understand survival instincts, and am sympathetic to the many who have been screwed, whipsawed, and browbeaten by the markets. There’s a million places to point the blaming fingers. At the end of the day, there is damage, on a wide scale and at the individual level.

But there’s also a spectrum here. And some people are in dire straits, losing their homes. And there are others who are financially stable, but are letting go of investments that didn’t work out. These cases introduce an interesting moral quandary in a paradoxical situation: what’s good for the individual is not good for the collective.

Meaning, at the individual level, default makes sense when you’re upside down. Or at least it might. We do the math, sometimes it says let go, sometimes it doesn’t. But strategic default isn’t just about you and some big evil corporation. It affects your neighbors. And neighborhoods. And collectively, the entire fabric of the US housing market. And then the broader economy. There’s a ripple effect here. More defaults lead to more defaults, when you think it through.

So what moral obligation does one have when addressing this equation individually? I first wondered about the fading social stigma associated with strategic default back in December of 2009.

What if that individual is in a position of public service, like a city supervisor? Does it change? What do you think? As an interesting juxtaposition, the first link under the article is to a story about Oakland mayor Jean Quan, another public servant across The Bay, and how she took a massive pay cut.

I’m going to leave it at that. I only wish to introduce the topic. Tell me what you think?

How Accurate Is The Freddie Mac Weekly Primary Mortgage Market Survey (PMMS)?

Answer: It depends.

Given the volume of spam in your inbox about mortgage approvals, historically low rates, etc etc, marketing folks know that consumers are looking, and looking frequently, for good information about mortgage rates. But what’s available on the internet is often just advertisement. Real info is often outdated to the degree of being useless.

And when rates expire every 2.29 hours, outdated means inaccurate and irrelevant.

Inside The Freddie Mac Primary Mortgage Market Survey

The Federal Home Loan Mortgage Corporation (aka, Freddie Mac) conducts a weekly survey of mortgage rates, and publishes them every Thursday. It is for conforming loans only; not Jumbo, FHA, VA or even High Balance Conforming loans. The survey results have a pretty broad reach, and you’ll often see their numbers referenced in high visibility consumer press like the Wall Street Journal, USA Today, and MarketWatch.

And from my conversations with Bay Area Mortgage clients, I also know these survey results are used as a reference point when we’re discussing loan pricing.

Most of the time the survey is pretty darn close to what I see on the front lines. Pretty darn close doesn’t always sit well with a consumer, but it’s an easy enough conversation to have. Sometimes though, they really blow it, and that makes for a more defensive, trust-undermining conversation. It’s not as much fun to be painted into Freddie’s corner. It’s kind of scary.

The Freddie Mac rate survey gets compiled through a sampling that runs from Monday through Wednesday each week, and then gets released on Thursday morning. Take a look at last weeks survey. Released on February 4, the data covers Feb 1, 2, and 3.

The average rate indicated is 4.81%, and average points are 0.8%. Last week, the rate was 4.80%, points at 0.7%. So what this tells us is the average 30 year fixed rate mortgage went up 0.01%, and points went up 0.10%. That’s not too big of a deal.

The problem is, this doesn’t accurately reflect what happened. And if you were a consumer shopping for a home loan, you probably noticed.

Freddie Mac Accuracy Compared To Real Live Rate Quotes

From Monday through Wednesday, the sample days of the survey, I show 4.750% costing .6% points at the lowest, and 1.0% points at the highest. So, an average cost of 0.8 points, roughly, just like the Freddie Mac survey, but the rate was .125% cheaper than the report.

Here’s where it gets interesting. Thursday, when the news was released by Freddie Mac, 4.750% had moved up to 1.375% points. And by Friday, about the time most people have caught up to the news release, 4.750% was costing 1.625% points.

So from week to week, Freddie Mac showed almost zero movement at all. This is the message conveyed by their survey, and the accompanying news release. Realistically, a consumer floating their rate during that week was looking at about 1.0% higher in fees for the same rate they saw a week earlier.

That is by no stretch an insignificant amount. When reality is that far from what the consumer reads in the news, it makes for unpleasant conversations with their mortgage broker.

It doesn’t always work this way. Sometimes, the report is right on the money. Sometimes, it works the other way, setting consumers up for a pleasant surprise when they get updated quotes from their lender. For what it is, the survey gives a great general idea of the week by week trend in rates, as long as you look at it on a longer term horizon. But the numbers in the survey are not live rate quotes. For those, you need a qualified professional, a game plan, and a phone/email address.

I’ve got a live rate quote form right up there on your right, if you’d like to know more.

Return of “The Mac”

Use the Freddie Mac survey when you’re in the early phases of shopping for a home, before you have something to lock in. We’ll see what happens with today’s release. Probably a catch-up from last week’s movement. A week after the fact just isn’t helpful if you’re shopping for a mortgage.

Update!

The Week 6 Freddie Mac survey was just released. And, as predicted, it has caught up to last week’s move, showing the average rate up to 5.05%. But it’s currently this week, not last week. In fact, it’s Thursday of this week. So is the report accurate? Sure, but it is not real time. And therefore, if you are shopping for a mortgage, it really doesn’t give you more than a general idea. Use it accordingly.

Why You Might Want To Lock Your Rate Ahead Of Tomorrow’s Jobs Report

Locked & Chained photo © 2008 Bala | more info (via: Wylio)One thing about financial markets is, you have to be careful when going against the prevailing trend. We all hear stories about the fortunes made by breaking from the pack and going the other way, and we often are reminded of the famous Warren Buffett quote “try to be fearful when others are greedy and greedy when others are fearful”.

Yeah, I get it. And I like it. I’ve personally got a deep fear of blindly following anybody or anything.

But if you want to be a contrarian, you have to have impeccable timing. Otherwise, when you try and stand out in the crowd, you might wind up getting run over by the stampeding masses.

“The Trend Is Your Friend”

The above saying is trader speak for ‘go with the momentum’. The current trend in mortgage rates is up. New economic news hits the wires every day. In recent weeks it has been mixed at best. If you ask me, most accounts of “improving” economy are desperately spun with optimism, but maybe that’s just me being the contrarian again. Call me a skeptic. In the best interpretation, the news has been “less bad”, not “improving”. Big difference.

I fear a turbulent, undulating ground beneath a thin stable layer on the surface.

But enough about me, let’s talk about your mortgage. Are you working on a purchase or refinance transaction? Simply put, I think there is more risk in floating than in locking into tomorrow’s January payroll and unemployment data, aka ‘The Jobs Report’.

Perspective On The Jobs Report

On Wednesday, ADP released it’s January report. This one is the precursor to the Bureau of Labor Statistics report. It showed 187k new jobs in January. Economists estimate that roughly 125k-150k new people enter the job market each month, as graduates, immigrants, etc. So the 187k new jobs represented about 50k jobs for previously unemployed people. Barely puts a dent in it. They also revised the December number down by 52k jobs. So the net result is just about a break-even. This is not the picture of a recovering economy. Bond markets shrugged it off, and rates rose on the day. I believe there’s a disconnect here, but it will take something more obvious to break the trend.

The Bottom Line

But the bond market is looking for more signs of economic strength, and right now, anything that doesn’t outright refute that view seems to reinforce it. A report that is ambiguous doesn’t rattle the current expectation that we’re slowly recovering.

I see three basic outcomes to the report tomorrow:

Strong report; rates higher
Report matches expectations; rates higher on ‘confirmation’ of belief
Weak report; rates moderately lower

I think it will take a real disaster of a report to disrupt this trend. And all it would do is bring rates back down to the other side of their recent range. It might change the tone, but I doubt it moves the market too far. Alternatively, a mildly strong report could be all it takes to bump rates into then next updraft. The sensitivity is just in that direction.

Of course, I could be totally wrong. But why risk it? Rates are right near their historical lows, money is cheap. Don’t let it slip out of your hands. Play this one safe.

If you feel like you could use some help navigating your upcoming refinance or purchase transaction against the trickle of economic data points, contact me and let me know about it.

How Often Do Mortgage Rates Change?

Number of mortgage rate sheets per day in January

One of the things that can be difficult about shopping for a mortgage, or for a mortgage provider, is that as you make contact with a few people and ask about rates, the ground is shifting beneath your feet.

Call one lender first thing in the morning, email two others at lunch, one of whom doesn’t reply until the end of the day, and you’re looking at three different ‘vintages’ of rate quote. Can a fair comparison be made?

Maybe.

But you’ll need to know first if rates have changed over the course of the day. And based on recent history, odds are you’ll be comparing apples and oranges. Ok, to be fair, oranges and tangerines.

But when it comes to mortgage quotes, the little differences can be meaningful. If you want to maximize your shopping results, you need to make sure you are comparing quotes from the same vintage.

Rates changed ever 2.29 hours in January

In January, there were 20 bond trading days. We received 61 rate sheets over those 21 days, or an average 3.05 rate sheets per day. There were at least 2 rate sheets per day, and the most extreme day had 6 different sheets.

Assuming an average of 7 hours for an open lock desk, and 3.05 rate sheets per day, that means rates changed every 2.29 hours.

How to stay in front of it

Need help with a rate lock strategy? Contact me below and tell me how I can help.

Why You Might Want To Float Your Rate Into Tomorrow’s Jobs Report

Numbered Floats of the Lobster Fishermen of Conch Key During the Off-Season, Thousands of These Are Newly Painted and Stored All over the Little Island. photo © 1975 The U.S. National Archives | more info (via: Wylio) Mortgage Rates for Bay Area Real Estate and beyond were given a little jolt yesterday based on another signal that our economy is mildly improving… or at least “less bad” than before.

The report that gave rates a kick was the ADP Payroll data for December. ~300k new were created in December, whereas the expectation was for 100k. That’s a huge upside surprise, and markets react swiftly to surprises.

But the ADP report is taken with a grain of salt, in this case specifically because it doesn’t categorize temporary employees differently than full time ones. So, the numbers are assumed to be full of seasonal workers as you might expect when you realize that most retailers hire on extra help through the Christmas season.

Why You Want To Float

Tomorrow morning, before most of us are even awake, is the REAL jobs report, which contains official economic data on December jobs, and the unemployment rate. The market is highly sensitive to unemployment right now, and looking hard for anything to confirm or deny that we have an improving economy. 300k new jobs would be a significant step better than what we’ve been seeing in recent months, years even.

But if the report tomorrow helps shine a light on the ADP report, indicating that it was full of temporary (non-permanent) employees, then the market will likely want to exhale and undo the move it made yesterday, which should bump rates back down a little.

I’d be careful though, the larger trend in recent weeks has been for higher rates, driven by “less bad” economic data. So the sensitivity here is definitely to the upward direction with rates, even though I believe the probability favors a downward move.

With the volatility we’ve seen in recent months, be prepared for a report like this to move the market by .25% or so in either direction, if it misses expectations by a wide enough margin.

Want to talk about it? Send me an email and let me know what’s on your mind…

Economists Give Each Other Wet Blankets For Christmas

Even though I’m no economist, my brain is definitely wired that way. But sometimes the drab, dry, robotic formula-crunching path to every decision about every choice you have to make is a real buzzkill.

Take the Christmas holiday, and the associated tradition of gift giving for example. This week, three like-minded stories came into view, all very interesting, and each picking apart the economics of gift-giving to the extent that a sympathetic ear would be ready to just give up and quit.

Bah. Humbug!

Here’s a link to and description of each piece from the “boo-hiss” crowd:

Ric Edelman – Teaches you how to keep your Christmas shopping budget under control. I love Ric, and it’s his job to teach consumers to be smarter about their money. I get it. But people need to have a little fun too. While he’s charismatic for a money & numbers guy, he’s admittedly not where you go to get advice on fun ways to burn through cash. Fine. But … brrr you wouldn’t have a more frigid Christmas if you ran out of firewood last week.
WePay infographic on Mashable.com I don’t know WePay. I gather they’re an outfit that aims to teach you how to be smart with your money. Cool, fine. I really like this view of the gift “Missgivings” – they really do hit on several aspects of the holiday gift frenzy that generally get people to that Scroogy disposition. Very economic. Looking at opportunity costs, and beyond. There’s a lot of waste – your time, your money, the crowds at the stores, and the odds that you find a gift for somebody who would pay the same amount for that item – slim to none, right? Fine. But BORING!
Joel Waldfogel & the Planet Money team on NPR – devise a very clever experiment to address the situation the WePay infographic illustrates so well. It’s actually quite amazing what happens. You should listen. Waldfogel is author of Scroogenomics: Why You Shouldn’t Buy Presents For The Holidays. I have not read it, but it does sound pretty interesting (it’s that econ brain wiring, sorry). Bottom line, go ahead it if you’re looking to make excuses for not giving loved ones gifts. Booo!

The problem is, as much as I get the logic, I hate it. Gift giving is a sport I enjoy, and as much as I love to receive gifts (email me for my address, ha!) I truly prefer to give them (In this regard, I fancy myself a lot more Jack Donaghy than Liz Lemon). But only when there’s a good reason, and a good gift to match the person. Not a forced, have-to-dont-really-wanna-but-its-a-holiday thing. That’s weak.

My recipe for success with gift-giving:

Do your Christmas shopping all year. Keep mindful of people you care about, and you’ll stumble into great things that will be fun to give as gifts. Or, the reverse: Stumble into something you think is cool, and think about who would appreciate it the most.
Buy it, or bookmark it. A true economist would never pay early for something they didn’t need until later (see time value of money). And a true miser would scour the internet for every possible discount or free shipping code (takes one to know one). Whatever floats your boat. But this way you’re not left scratching your head, elevating your heart rate, or worse – not giving gifts to people on Christmas.
That whole crowded mall in mid-December thing takes on a whole different appeal if you can go and just walk around with a big wool jacket and a hot peppermint mocha. No shopping, just soaking it in, watching people ice skate, listening to the Vince Guaraldi tunes leaking out from the department stores, or playing in the square, whatever whatever. This is how you consume the season. Trust me.

This way, you don’t waste, you don’t give crappy gifts, and you don’t freak out at the malls and ruin the spirit of the season. Plus, if you actually pay for gifts a little here and a little there, you’re not going to have a credit card hangover in January…

… wishing you a merry Christmas

Bond Market Analysts Finally Rolling Over As Rates Continue To Run Higher

Running Away
photo © 2010 Tedd Santana | more info (via: Wylio)Mortgage rates in the Bay Area and elsewhere have been on a pretty wild run higher over the last several weeks. We’ve seen a few big jumps happen all in a string, not something we see too often without some corrections along the way.

That this has happened in the face of an economy that continues to struggle in general, and with unemployment and deflation concerns and no clear path to recovery, has kept many of the mortgage market analysts and commentators adequately confused as well.

It’s been like watching a kid on the beach running away from a wave as it rolls up on shore, and finally getting their feet wet. Or in this case, maybe the wave kind of overcame them and knocked them down, got them soaked. And just before being dragged out to sea, the commentary from the analysts has changed in the last day or two from one that was generally defiant, to surrender.

I mean no disrespect here. I know that nobody is capable of predicting the markets. But I look for a variety of opinions, because that gives perspective on the events that impact markets as they unfold, and helps frame conversations for me with my clients. Thats why there are people getting paid to analyze and forecast. And that’s why I read, watch and listen. Ever since Quantitative Easing II was announced by The Federal Reserve, the bond market has been retreating, and the analyst consensus has been pretty heavily oriented toward disbelief, and an expectation that it would come back around most, if not all the way. After all, that was the whole point behind QEII.

Then on Monday, two days ago, we got the first day of what looked like a correction, to bring the rising rate trend to a halt, maybe send it back the other way. It was triggered by an episode of 60 Minutes, where Fed Chairman Ben Bernanke reiterated that he believes our economy is fragile, and stated that he expected unemployment to be elevated for several (4-5) more years. This gave all the collectively defiant analysis the reinforcement it thought it needed to once again remind that this too shall pass.

Until yesterday. The consensus changed quickly. Triggered by tax cut extensions and unemployment benefit extensions, which happened over night. Look at some of the snippets I’ve gathered over the last two days:

Yesterday: The equity market is rallying and the bond market getting hit; that the deficit will increase by $700B is a death knell in the bond and mortgage markets for lower interest rates, in the minds of many it clearly shows that Washington is still paying only lip service to deficit reduction. That is the knee jerk reaction and in an already bearish rate market it doesn’t take much to add selling of fixed income investments. <$700B being a reference to the expected shortfall to the US Treasury due to tax cut extensions…>

Today: Very unusual that there seems to be no one stepping up to try and put some reasoning behind the spike in rates. It is as if it is happening with shock and awe, no consensus or any particular explanation.

Yesterday: With the way the market is reacting to goods news compared to bad news, I would suggest if you are not already doing this, to lock when your deal is approved until this madness stops. Changing advice from float to lock.

Today: Lock (no comments)

Yesterday: Not sure current level of support is strong enough and if we dont hold, we will fall hard in search of new lows. Ouch.

Today: We are in a free fall until bottom can be found

As I was writing this, the bond market seemed to have hit a bottom. The day isn’t over yet, but it bounced, and has started to recover. Nowhere close to erasing yesterday’s move, but no longer looking so much like a free fall. We’ll see… There’s always tomorrow. Or later today. But either way, it struck me as a good time to revisit the Investor Emotion Cycle (chart). When everybody starts thinking the same way, look out.

It can be tough to evaluate your own circumstances when the targets are moving this quickly. But if we’ve seen the bottom in rates, and are in fact headed to a new range, it’s going to stir up quite a few issues for people with adjustable rates, or who had been waiting for something else to fall into place. Sound like you? Let’s talk about it. Contact me below, and let me know what’s up.

Let’s get back to the Jobs Report

Conditions Heading Into The Jobs Report

Rates changed ever 2.71 hours in February

Only A Partial Picture

How to stay in front of it

Inside The Freddie Mac Primary Mortgage Market Survey

Freddie Mac Accuracy Compared To Real Live Rate Quotes

“The Trend Is Your Friend”

Perspective On The Jobs Report

The Bottom Line

Number of mortgage rate sheets per day in January One of the things that can be difficult about shopping for a mortgage, or for a mortgage provider, is that as you make contact with a few people and ask about rates, the ground is shifting beneath your feet.

Rates changed ever 2.29 hours in January

How to stay in front of it

Number of mortgage rate sheets per day in January

One of the things that can be difficult about shopping for a mortgage, or for a mortgage provider, is that as you make contact with a few people and ask about rates, the ground is shifting beneath your feet.