Mortgage rates moved slightly lower again today, bringing them back in line with the lowest levels of the month. Recent improvements are somewhat of a paradox as rates typically move higher after stronger payrolls data, which we saw on Friday.
This time around, rates had been moving higher for the entire month of November and into early December. With the risk that last Friday’s jobs report could have done more to suggest the Fed reduce asset purchases this month, rates were arguably stretched to their near-term defensive limit.
In other words, rates were set up slightly higher than they otherwise would have been. Although the report was better than expected, it wasn’t by much. It left only 15% of economists foreseeing a December reduction in Fed asset purchases whereas interest rates were prepared for more of a threat.
As such, we’ve been able to catch a bit of a relief rally in rates. Compared to yesterday, rates are noticeably lower. Most lenders are now back down to 4.5 percent for ideal, conforming 30yr Fixed scenarios (best-execution). To the point of this being akin to a victorious battle while losing the war, apart from the past 7 days, today’s rates are still the highest in over 2 months.
If we’re to consider this anything other than a brief relief rally, we’d need to see additional improvement from here. It becomes progressively less likely at current levels. We’ve picked up enough territory that tomorrow might not be too soon to expect a push back. From there, Thursday morning’s economic data may provide the next cue.