This week was a short week with Monday being a Holiday, but it was still a wild one for mortgage rates. As of right now rates are almost back to where they were last Friday.
On Tuesday and Wednesday we did not see much change in rates, but on Thursday rates shot up. The reason for the increase on Thursday was because the ADP payroll report was released and it was indicating that the job market was doing well. ADP is the largest payroll company in the US and therefore they have a pretty good indication of how the job market is doing and they release their report 1 day before the official job numbers come out from the labor department. Since the ADP report was indicating that job numbers were going to be good investors took it as a sign that the economy is doing better and that gives the Federal Reserve (FED) less of a reason to do another round of quantitative easing. Another round easing would attempt to stimulate the economy by keeping rates low, so whether the FED eases or not has a direct impact on rates hence the spike in rates. Today (Friday) the official job numbers came out and they were far worse than the ADP estimates so the market did a complete U turn and rates fell back down.
On Monday there are some new Fannie Mae and Freddie Mac rules going into effect that will affect mortgage rates. Most lenders sell their loans to Fannie or Freddie so when they change things it has an effect on our whole industry. This time they are changing how loans are priced and unfortunately this change will be passed on to the consumer by the lenders. Even if the market is completely flat on Monday rates will come out about 1/8% higher.
Tags: market preview, mortgage rates outlook