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Mortgage rates rose abruptly today, moving highest levels since July 9th as financial markets prepare for tomorrow's important Employment Situation Report. These preparations refer to several underlying factors including the reaction to this morning's stronger-than-expected economic data as well as concern that similarly stronger data tomorrow could lead rates even higher. Today's move took 30yr Fixed best-execution to the upper edge of 4.5% with 4.625% very close. Tomorrow is an extraordinarily important day with the highest prospects for volatility since the last employment report caused the biggest one-day rise in rates of the past 10 years. It can go either way, depending on the data (which will be released well before any lenders release rate sheets for the day).
To be clear, if the data is weak enough, it would likely result in lower rates, but the range of possibilities is wide, and it's "easier for markets to play defense" against rising rates than it is to try to guess when, and by how much the longer-term trend higher will stop. It's similar to the popular phrase "no one wants to catch the falling knife." Traders aren't eager to trade rates aggressively lower in a rising rate environment. Our only big moves lower in rate since early May have been in response to even bigger moves higher. There continues to be no organic drive toward lower rates, and that continues to be very scary to anyone hoping to see lower rates any time soon.
Loan Originator Perspectives
"We're all been hugely aware of the risks posed by data this week, but the consensus was that yesterday's Fed statement and tomorrow's NFP report were the events to watch/fear. Survived the Fed release and had a nice rally yesterday, but it evaporated this AM and selling snowballed. We're down well over 100 bps in MBS pricing (translated to an additional loan cost of 1%) in pronounced late day selling. Traders must be expecting a solid report tomorrow, we'll see at 8:30 EDT. Days like today illustrate (again) how critical it is to lock loans early, as MG's commentary has said for months, we're in a rising rate environment." -Ted Rood, Senior Originator, Wintrust Mortgage
"Jekyll and Hyde market from yesterday morning to yesterday afternoon to today. Lock it you can because tomorrow could be another in our recent string of ugly Fridays. Our only hope to slow down the runaway train is a bad jobs report." -Mike Owens, Partner, Horizon Financial Inc.
Today's Best-Execution Rates30YR FIXED - 4.5% - 4.625%
After rising consistently from all-time lows in September and October 2012, rates challenged the long term trend higher, but failed to sustain a breakout
Uncertainty over the Fed's bond-buying plans is causing immense volatility in rates markets and generally leading rates quickly higher
Ongoing Lock/Float Considerations