Mortgage Insights

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Mortgage Rates Stable Ahead of Monthly Employment Situation Report

Dec 8, 2017

US mortgage rates remained mostly stable on Thursday, appearing generally unfazed by political announcements such as the likelihood that the tax reforms will actually pass and recently released financial data.

According to the Labor Department’s latest report, former employees submitted only 236,000 unemployment benefit claims, while the projection from analysts was around 240,000.

That is normally bad news for mortgage rates because unexpectedly low unemployment claims hint at an economy that is performing above expectations. This boosts the demand for investments such as stocks, decreases the demand for bonds, and places downward pressure on bond prices, which means higher returns on bonds and higher interest rates.

On the other hand, this is only a weekly report, and the majority of people will give more weight to today’s Monthly Employment Situation data.

Yesterday morning’s financial data was relatively neutral for interest rates. If you don’t plan to close in the next few weeks, it is probably fairly safe to opt for a floating mortgage rate right now. Rates are, however, quite affordable at the moment, so locking in the best available offer is also a valid option.

Important stock markets were marginally higher, but not enough to drive up mortgage rates.

The gold price was also stable at $1,267, which makes gold’s effect on mortgage rates neutral at this stage. If the gold price increases, it usually means investors are concerned about the economy, something that would drive down mortgage rates.

The oil price dropped from $57 to $56 per barrel, which benefitted mortgage rates. Increased energy prices generally push up other prices and rates.

An important benchmark for mortgage rates, the return on 10-year Treasury Notes, went up one basis point to 2.33%. This is bad news for homeowners because it normally has a direct effect on mortgage rates.

CNNMoney’s Fear and Greed Index, meanwhile, dropped from 61 to 60, which happens to be the border between “greedy” and “neutral”. This is good news for mortgage rates because the deeper this index moves into “greedy” territory, the higher interest rates normally become.

Use our mortgage calculator to determine how much you can afford to borrow, and do not forget that we offer a mortgage pre-approval facility.

 

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