I haven't written a blog post in a bit, super busy on many fronts and nothing too much to report. So, why waste the time writing and tire your eyeballs on the trivial, right?
Well, after looking at the price action in the mortgage-backed securities market today there is news worth sharing. So, here we go!
What is it?
Well, the September Jobs Report was released today. Normally, this monthly report comes out on the first Friday of the month but with the government shutdown it was delayed. Now, the report came out at 148,000 jobs versus the 180,000+ number the market expected.
Mortgage-backed securities (MBS) are up strong on the news and, more importantly, prices have moved back above their 200 day moving average. Remember, as MBS prices go up, mortgage rates go lower.
Look at these charts:
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| 3 Month Chart on Fannie Mae 4.0% Coupon |
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| One Year Chart on Fannie Mae 4.0% Coupon |
The chart above shows a longer-term view of the price action. You can clearly see how prices fell hard from May through September. From all that choppy price action in August and September prices formed a base of support and have since moved higher.
From the technical setup the odds are increasing that we will see mortgage rates move lower. I expect that a good price target is a conforming 30 year fixed rate around 4.0%. For now, I don't think below 4.0% with no points will become available but, in this manipulated market, who really knows, right? :)
Another wrinkle to these improving rates is that we might see the conforming fixed rates move back below the jumbo fixed rates. We are in a time of a weird market anomaly where the jumbo rates are sometimes pricing lower than the conforming ones. This won't persist forever.
Bottom line: expect better mortgage rate pricing in the weeks ahead.
Brett
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