How To Get Home

Stability in the stock market last week (as compared to the wild ride the week before) caused mortgage investors to return their focus to the economic data, and there were few surprises early in the week. Mortgage rates held steady through Thursday, as investors mostly remained on the sidelines ahead of Friday’s Employment report. When stronger than expected jobs data was released Friday morning, though, they jumped back into the market, pushing mortgage rates higher.

The economy added 97K new jobs in February, close to the consensus forecast, but revisions to prior months raised the total by an additional 55K, which pushed the Unemployment Rate below the expected level. Even more damaging for mortgage markets than the growth in jobs, Hourly Earnings rose at a 4.1% annual rate. The Fed is concerned about higher wage inflation from tight labor markets, and this data effectively crushed investors’ hopes for a Fed rate cut any time soon.

In the housing sector, the January Pending Home Sales index fell 4%, following a comparable rise during the prior month, consistent with a period of stability. The index is based on contracts which were signed but were not yet closed, so it is a leading indicator of future home sales. In addition, comments from former Fed chief Greenspan and Treasury Secretary Paulson reflected the view that the housing market has already reached bottom.

There is a ton of economic data coming out this week. Stay tuned to see which direction the economy and rates move as the reports are released. The Baron’s Economic Calendar link to the right will show you everything coming up. Make sure you discuss your rate-lock options with your Mortgage Planner to protect yourself from the swings in the market.