Mortgage Interest Rates May 4, 2017

Mortgage interest rates for May 4, 2017 were a bit worse compared to yesterday.  The main reason was the high employment cost reading received first thing in the morning and it appears the market is leaning more towards the sell side (although nothing too significant).  Also for May 4, 2017 was the weekly unemployment claim numbers; hey came in lower than expectations (at 238k).  The bond market was a bit spooked by the numbers as higher employment costs can lead to higher inflation which is bad for bond holders.  However the selloff was no orderly and nothing that significant.

  • U.S. worker productivity fell in the first quarter, leading to a jump in labor-related costs.
  • Nonfarm productivity, which measures hourly output per worker, dropped at a 0.6 percent rate.
  • Economists polled by Reuters had forecast productivity unchanged in the first quarter.
  • Unemployment claims were 238k, down from the 257k reading from the prior weak
  • The 10y yield jumped above 2.36 in early trading

mortgage interest rateDon’t worry though; low California home loan rates are still here-still almost at their 2017 lows! Bonds will be watching oil closely; it’s near a 12 month low after a significant selloff today. Since mid-April oil has declined nearly 20% with little to no press.  This is a huge move down in a very short period of time. Oil is a few dollars away from levels we’ve not seen since the summer of 2016.  Lower oil process could help bonds as the move down can be deflationary.  Oil is worth watching and if it continues to move down and stays below the sub 45 level then bonds may rally and mortgage rates will improve.  Keep in mind that nothing is instant with mortgage rates; generally lenders are cautious with improving rates so if you see oil sell off more don’t expect an immediate drop in mortgage rates.  As always; if you have any questions or you would like a no cost-no obligation quote please contact us directly at 1-800-550-5538.