Mortgage Rate Forecast – May 6, 2011

Locking Stance:  LOCKING      Mortgage Bonds:  -19bp

Mortgage backed securities are doing much as expected at this point with a somewhat mixed (somewhat unfavorable) Jobs Jamboree and still unable to break the 200-day moving average.  Correction here we come.

I am still trying to figure out how to make a table on this Macbook Pro, so here are the numbers in a normal format.  Nonfarm Payrolls came in at 244,000, well above the 185,000 expected.  Private Payrolls, came in at 268,000, also well above expectations of 200,000.  The Unemployment Rate ticked higher to 9.0%, which is not really surprising, but that is what keeps this report mixed.  The Average Workweek remained at 34.3 hours and Average Hourly Earnings were up 0.1%, just shy of the 0.2% expected, also adding to the “mix”.  As mentioned, the overall Jobs Jamboree is generally unfavorable to MBS prices, and thus, mortgage rates.  The “rubber band” has been stretched too far and this report appears to be unable to keep the “snapback”, or corrective move, from happening, solidifying the “locking” stance.

What does this mean for Mortgage Rates? Mortgage rates are not likely to move lower, at least not yet.  We will most likely see mortgage rates edge higher before they make another attempt at moving lower, but any future attempts will have to have  a lot of strength behind them to push any lower than present levels.

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