Friday 12/5 …Jobs Report is Ugly

The data is in and it is not pretty for the jobs outlook.  Nonfarm payrolls were expected to show a loss of 325,000 jobs, the actual number came in at a loss of 533,000.  To make matters even worse, September and October were revised downward to show additional losses of 199,000.  The unemployment rate was expected to come in at 6.8% but came in slightly better at 6.7%.  Since the reports were released mortgage back securities have jumped all over the place.   Generally speaking bad employment numbers is a positive for mbs, but sometimes some news can be so bad that it is good for no one.  We are currently 7 ticks or about .25 in discount below going out levels from yesterday but no need to panic and lock rates.  Lenders didn’t pass on the gains from yesterday and I anticipate similar rates today as yesterday. 

I also want to take a few moments to write about the news everyone has heard about the Treasury lowering rates to 4.5%.  First of all, the Treasury will not set an exact rate, they are hoping to encourage rates to that level.  And what do you think they have already been doing?  The announcement last week about the government buying mortgage backed securities is an example of an action the government can take to bring rates down.  Do not let this rumor postpone a refinance or a new home purchase. Right now, fixed rate mortgages are at all time lows sitting at 5%.  Is there a chance that rates will move lower, absolutely and a good chance at that.  There is also a chance of rates moving higher and there is much more room above us then below us as rates can only drop a little lower.  There is something to be said about a bird in hand is worth more then two in the bush. 

Stay tuned and we will post back if we see a sell off which would lead to higher interest rates.