Mortgage Rates Near 2-Month Lows After Jobs Report
Mortgage rates moved back down after a much weaker read on job creation from the Labor Department reported last Friday. In general, weak economic data tends to push investors away from stocks and toward safer-haven assets like bonds. Excess bond-buying demand causes bond prices to rise and rates to fall.
The only catch with the jobs report reaction is that movement in the bonds that specifically underlie mortgages was a bit smaller than in the broader bond market. For instance, the price of 10 year US Treasuries rose more than twice as much as the price of the most common mortgage-backed-security (MBS). In addition to lagging MBS, mortgage lenders haven't been keen on making big changes to their rate sheet offerings. As a result, rates are better today, but for some lenders, it's just as accurate to say "unchanged."
All caveats aside, in the recent context, Friday represented the best day for mortgage rates in roughly two months (or close to it, depending on the individual lender). This week brings a key inflation report in the form of the Consumer Price Index. Investors are on the edge of their seats over the possibility of an increase in inflation. If it happens, rates will likely snap back into the higher range seen in March. If inflation stays flat or if it stumbles, recent rate resilience could get a second wind.
Courtesy of Rick Lombardo 310.435.7439, Rick.Lombardo@grarate.com, VP of Mortgage Lending at Guaranteed Rate.
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