Should I Lock or Float? This Week- November 18, 2013

November_18th_2013_Mortgage_MarketThe Non-Farm Payroll numbers came in on the 8th of this month, well above expectations with 204K versus an estimate of 125K new jobs. In addition, revisions added 60,000 more jobs to the prior two month
releases and thus mortgage rates took a significant one-day beating – noted by the long red column shown on the far right of this graph. Prices are now almost back where they were before that report was announced.

For those of you shopping for a good mortgage rate, who did not lock at the time, may have just gotten your reprieve!

This week heats up once again on Wednesday with the release of the Consumer Price Index, Retail Sales, and Existing Home Sales. In addition, Ben Bernanke, our Fed Chairmen, will be addressing the Economist Club in Washington for the first time in over a month. His comments have a way of moving the market, so we will be all ears.

Freddie Mac Released Its Primary Mortgage Market Survey On Thursday

The average mortgage rates increased across the board, but remain below historical levels. The rate for a 30-year fixed rate mortgage rose by 9 basis points from 4.16 percent to 4.35 percent with discount points. While the average 15-year mortgage rate rose from 3.27 percent to 3.35 percent with discount points the same at 0.70 percent. NOTEThis is not a quote of our current rates, merely a survey of current prevailing mortgage rates provided by Freddie Mac. The survey pulled data up to Nov 14th, so it will not include the most recent trends in the market.

In other news, Janet Yellen, the President’s choice for chairing the Federal Reserve, defended the Fed’s quantitative easing policy during her first confirmation hearing before the Senate Banking Committee. QE, which involves Fed purchases of $85 billion monthly in Treasury and mortgage-backed securities, was designed to keep long-term interest rates and mortgage rates low – for now.

Analysts cite moderate but stable job gains, comparatively low mortgage rates and a short supply of available homes as factors contributing to improvements in the housing sector. But, much of the stability can be attributed to the Federal Reserve’s low interest rate policy. As long the Fed keeps its monetary policy intact, housing should continue to improve, but once the Fed feels the economy has turned the corner and starts to taper its monetary easing, there is a threat that the housing recovery could stall.

On the flip side, the government understands that the most important cornerstone to a thriving economy is one where the majority of its’ citizens are working. Jobs, jobs, and more jobs! If one is working, they spend more money and everyone is happy. If we continue to see job growth, lower unemployment numbers, than it won’t matter if rates go up a percent or two. An improving job market and rising incomes matter more to real estate than mortgage rates.

For those of you shopping for a good mortgage rate who did not lock last week, and are in contract, this may be your window to take advantage of our most recent gains. My current advice is a locking bias because we are close to overbought positions in the market.


For More information please contact Dan Tharp @ 916-257-1470 or email Dan at

 The information contained in this training has been prepared and distributed for educational purposes only.  This training information shall not be construed as a guarantee of loan approval; All loans are subject to underwriter approval.

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