Friday December 3rd, 2010 6:46 PM ET
By John Sauro
Mortgage Rates Climb As Bonds Loose Ground
Mortgage Bonds have dropped 400+ basis points in the last month, forcing lender to re price mortgage rates higher. It reminds me of May of 2009- the Bond dropped 650 basis points in just a few weeks. My concern is that prices could drop a lot further. All of this pales in comparison to the 10% mortgage rates only a short decade age, so today’s 5%- 30 Year fixed rates are fantastic by historical standards.
You don’t know where the bottom is until it is gone. So for those of you who were hoping for 3%- 30 year fixed rates, I recommend making a move while rates are still incredibly low.
This Weeks Mixed Bag of Economic Reports
- Novembers Chicago Purchasing Manager’s Index came in at 62.5, much better than expected, and the highest since April.
- Consumer Confidence was 54.1, much better than expectations of 52.0- the highest level since June.
- The Case Shiller Housing Index for September showed that home prices fell more than expected.
- The ADP Report showed that private sector employment rose by 93,000 in November, higher than expectations of 58,000.
- Initial Jobless Claims were reported at 436,000, above the expected 422,000.
- The November Jobs Report came in at 39,000, way below estimates of 130,000.
- The Unemployment rate ticked up 0.2% to 9.8%
No doubt, these are turbulent times.
The Fed and government are going to continue to try and revive the economy and this won’t be good for Bond Prices and Mortgage Rates.
There’s a saying- “Don’t Fight The Fed”
Therefore I continue to maintain a locking bias toward interest rates unless Bonds can move above the 200-day moving average.