THE JOBS REPORT TRICK IS THE MORTGAGE RATES TREAT

October 22, 2013 Noon

THE JOBS REPORT TRICK IS THE MORTGAGE RATES TREAT

The September 2013 jobs report has come and gone with expectations of 180K jobs created, the report delivered a paltry and disappointing 148K.  A large amount of economists have (rightly so) indicated that the number was  “weak” and have now pushed their forecasts of the Fed’s tapering out of the equation in October and December of this year and pushed out  to the 1st and 2nd quarters of 2014.  I was listening to Bloomberg this morning and they had Mesirow Financial’s Chief Economist Diane Swonk on as a guest commentator doing some guest reporting.  When she was interviewed immediately after the number Swonk stated it was an “abysmal number in private sector growth”  Further, using one of her favorite punch bowl analogies she states that the Fed will be effectively saying ”we’re gonna leave that punch bowl out until a few people get tipsy”  More economist views on the jobs data and tapering forecasts found here.   

MORTGAGE MARKET REACTS

US treasury markets responded immediately, moving swiftly higher, with yields going sharply lower.  At the time of this writing 10 year yields stand at 2.53% (-.07) and 30 years yielding 3.62 (-.05).  10 year yields have breached the critical 2.60% support level.  This will, obviously, be beneficial to mortgage rate pricing.  Many lenders are re-pricing lower this morning.   We look forward to lower re-pricing in the days ahead.    However we still going headlong into the Fed meeting and announcement on the continuation of QE3 on October 29-30 and the October jobs report on November 7th.   Current 30 year conventional conforming mortgages have a best execution rate of  4.125%. 

RATES ARE SCARY LOW

The combination of the lower rate coupled with anticipated declines in rates have opened up a new ray of hope for mortgage originators looking to capture re-finance business.  With rates targeting 4% and below we advise clients to get their applications in and documents ready so that they may pull the trigger when rates hit their personal target.  

Many prospective clients were caught unawares while waiting to get their re-finance “ducks in a row” in the late spring.  If you are thinking of refinancing don’t get caught!  Remember the old axiom “rates move up in tablespoons and down in teaspoons”.  

The next few months may be the last opportunity to drink from the Fed’s punchbowl and benefit of their largesse.   Look to this column at the end of the week where my focus will be on re-financing your mortgage and an update on rates. 

For now, rates are looking good, SCARY GOOD!

If you would like to contact Gil about questions about mortgages, you can call him at 312-961-4510 or email him at gil@midwest-lending.com.  To find out more about him and the people he works with, please go to www.gilvalentine.com  Gil is a licensed Loan Officer, NMLS#1019717