CONTACT ME
Mortgage Rates Finally Pull Back. Should You Worry?

Mortgage rates finally ended an impressive winning streak today, rising for the first time in 9 days.  Rates began that streak with a massive move lower following the UK's vote to exit the European Union and maintained momentum until they were right in line with all-time lows yesterday.  

Any time a winning streak extends past the 5 day mark (that's 5 business days, by the way), we begin to look for the inevitable correction that almost never takes more than 3 more days to show up.  In that sense, today's moderate move higher in rates isn't much of a surprise.  In fact, the resolute strength was arguably more surprising, and it raises questions as to how serious this single day of weakness may be.  

The answer to those questions likely lies in tomorrow's big jobs report.  Just yesterday, the minutes from the most recent Fed meeting showed us that the last jobs report was a bit of a concern for the Fed, and one of the reasons they kept rates steady last time around.  The Minutes also mentioned that the Fed wanted to see continued improvement in employment data, and to essentially rule out that the last jobs report was the start of an alarming shift toward labor market weakness.  

While it's true that one piece of economic data isn't enough to decisively put those questions to rest, tomorrow's report can still have a big impact.  If it's much weaker than expected (i.e. lower job creation) markets will assume the Fed will continue waiting to raise rates, and mortgage rates would likely benefit from that scenario.  If, on the other hand, it is unexpectedly strong, watch out!  Such a report would effectively cancel out the alarming implications of the previous report--implications that helped rates move significantly lower in early June.  

Of course, there's always the possibility that the numbers land somewhere in between, and that rates don't end up moving too much at all, but the point is that the POTENTIAL for bigger movement is elevated tomorrow.  Moreover, if we get a big move higher in rates tomorrow it will increasingly make yesterday look like a "bottoming-out" for rates in the medium term.  

This Daily Mortgage Rate Update is provided in partnership with Mortgage News Daily.