A strong jobs report usually means mortgage rates will be on the way up as well, but the opposite happened when this week’s numbers were released. Despite the strong showing from ADP—which indicated businesses added a higher-than-expected 257,000 jobs during December—the conventional 30-year fixed quote crept back down to 4 percent for the average lender, down from 4.25 percent at the end of December. The change means rates are their best for the last month.
What’s the story?
There’s a chance that lenders and market participants were being overly conservative due to concerns regarding the Fed’s meeting minutes from January 6th. Those minutes ended up being rather mundane.
There are certainly other outside factors contributing to the lowered rates as well, however. Bond market improvements encouraged many to lower rates, while other loan originators pointed to the continuing low price of oil.
“Falling oil prices overcome a much better than expected ADP employment report helping rates to stage a small rally today,” said Victor Burek, of Churchill Mortgage, who also suggested that Chinese stock market concerns as a possible explanation for the low rates.
Don’t sit on the good news for too long, however, he warned. The Fed is still moving toward higher rates and it’s unlikely that numbers will get much lower.
“I do fear this might be short-lived since we have non-farm payrolls hitting on Friday (January 8th),” he noted. “I think it would be wise to look at locking in today if you are within 30 days of closing.”
The moral? Enjoy 4 percent while you can…but realize that “while you can” probably won’t be all that long. Those in the market should be looking to lock that rate down as soon as possible.