Current Rate Conditions - 10 February 2014

Forwarded exclusively by:	KATHY MALONE Corridor Mortgage Group Office: 410-499-2900 Email: kmalone@corridormtg.com website: www.kathymalone.com NMLS#: 287748
Monday, February 10, 2014
Why does the Non-Farm Payroll report affect mortgage rates? On Friday, the Non-Farm Payroll report came in much weaker than expected (134k new jobs vs the estimates of 185k), and helped stabilize mortgage rates once again.  Have you ever wondered why a single report could have such a huge effect? The non-farm payroll figure (a.k.a. NFP) represents the number of jobs added or lost in the economy over the last month, not including jobs relating to the farming industry. The farming industry is not included because its seasonal hiring distorts employment numbers around harvest time. Non-farm payroll is an important day trading indicator because it affects all markets; the job market impacts the FX, bonds, stocks, and derivatives markets. From a basic economic sense, when the NFP shows an increase in jobs it means the economy is doing well. An increase in employment means that companies are growing, and a secondary benefit is that the newly hired workers will have more money to spend on goods and services. A decrease means that the opposite is true. NFP and the overall job market have become key indicators for traders and that is reflected in the market’s sensitivity to the non-farm payroll report. The report includes the unemployment rate, what sectors have increased or decreased their workforce, what the average hourly earnings are, and any revisions that need to be made to prior reports. So why does it help mortgage rates?  To put it very simply, a poor report highlights the lack of economic growth.  Lack of economic growth is good for bonds, including MBS (mortgage-backed securities), the key driver to mortgage rates.  So when a report comes in showing weakness, like Friday's did, traders are more likely to buy bonds including MBS which helps mortgage rates. The question now is how long will the effect last?  Likely not long, as this week has lots of economic data for traders to digest.  Be sure to stay in contact with your mortgage professional above to monitor mortgage rates through the week.   Last Week's Mortgage Rate Recap Mortgage Rates Currently Trending: Slightly Higher Last week saw rates slightly higher at the end of the week after starting the week off with a strong rally on Monday.  Rates deteriorated through the week, and finally stopped worsening on Friday with the release of the weaker than expected jobs report (Non-Farm Payroll Report).          This Week's Mortgage Rate Forecast Mortgage Rates Forecast: NEUTRAL This week we are starting off with no economic data on Monday, but interest events through the rest of the week.  The biggest event will be Janet Yellen's first testimony as the Fed Chair, followed by the 10 year Treasury auction.  The biggest report of the week will be Thursday's Retail Sales report.  BOTTOM LINE:  Work closely with your Mortgage Loan Professional to monitor the market in real time to stay ahead of a reversal and the worse rates that will come with it.    RateAlert’s Most Trusted Mortgage Lending Professionals:  Loan Professions that subscribe to RateAlert Executive services have the training and market knowledge at their fingertips, along with live trading data during market hours to expertly help navigate the difficult and often times confusing process of understanding rate movements and which factors may cause volatility when considering whether or not to lock.  If you’d like to learn more about what things to consider when timing the market in an effort to obtain the best interest rates, don’t hesitate to contact the person who sent you this commentary. This commentary has been sent to you by the Mortgage Loan Originator (MLO) above because they thought you may find it interesting or helpful. The views and opinions offered do not necessarily represent the views of your MLO. Please contact them with any questions or to find out more about the information listed herein and how to work with them
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