Mortgage Rates, The Fed and The Jobs Report

Heading into the first few days of August 2019, mortgage rates are just above their recent lows. Conforming, FHA and Jumbo fixed mortgage rates remain attractive and mortgage loan application volume has decreased the last few weeks however they are significantly above levels seen earlier this year. Homeowners are taking advantage of mortgage rates being near multi-year lows and homebuyers are starting to come back to the market as home prices seem to be leveling off.

Thursday is the ISM report and on Friday we have the Employment report and this could have a significant impact on mortgage rates heading into next week (more on this below).

Mortgage Rates - Conforming Loans

Mortgage Rates - FHA Loans

Mortgage Rates - Jumbo Loans

Mortgage Backed Securities & Treasury Snapshot:

August 1st, 2019:

Mortgage Backed Security FNMA 3.5 started the day at 102.25 and the FNMA 4.0 coupon started the day at 103.47. The 10y Treasury yield started the day at the 2.03% level.

As expected the Fed lowered rates by .25% yesterday however it’s really important to remember that this does not mean mortgage rates declined by a .25%. The Fed does not control mortgage they only have an influence over the Mortgage Backed Securities market (which is where mortgage rates originate from).

Yesterday was volatile for bond markets with yields moving to 2.02% then moving up to nearly 2.08% and finally finishing the day near 2.01%. For most lenders, mortgage rates in California remain stable through out the day as mortgage companies took a “wait and see’ approach before making any significant adjustments.

August 2nd, 2019:

Mortgage Backed Security FNMA 3.5 started the day at 102.73 and the FNMA 4.0 coupon started the day at 103.67. The 10y Treasury yield started the day at the 1.86% level.

Huge moves yesterday in both the Treasury and Mortgage Backed Securities market after President Trump announced additional tariffs on China. Shortly after he released the tweet the 10y yield moved from 1.95% to 1.88%.

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Important Economic Data This Week:

Here we cover the daily economic events that might impact mortgage rates:

During the next two days we have some fairly important economic reports including the ISM Manufacturing PMI, Consumer Sentiment and Employment reports. The number one driver of bond markets and mortgage rates right now are these reports so it’s important to keep a close eye on what’s is released.

A stronger than expected report could have a negative impact on mortgage rates and a weaker than expected report could have a positive impact on mortgage rates.

Thursday August 1st, 2019:

Today we have the ISM Manufacturing PMI and weekly Jobless claims reports.

ISM Manufacturing PMI:

Expectations are for a reading of 52.00 after last months reading of 51.7. Along with the Employment report tomorrow the ISM Manufacturing PMI report plays a significant role in bond market and mortgage rate direction.

The report was just released and it came in below expectations (51.2); this is another month of decline for a very important economic report. An internal component of the report (prices paid) sank dramatically. Expectations were for a reading of 49.6 however the prices paid component came in at 45.1 (good news for inflation which means good news for Mortgage Backed Securities).

Weekly Jobless Claims:

Expectations are for a reading 214,000 unemployment claims filled. The reading came in at 215,000 unemployment claims. Continued claims rose from 1,676,000 to 1,699,000 continued. This means that unemployed people are having a harder time finding work then in previous weeks.

Friday August 2nd, 2019:

On Friday we have the monthly Employment report along with Consumer Inflation Expectations (1y and 5y) and Consumer Sentiment reports.

This is another important day for bonds and mortgage rates. The monthly Employment report plays a significant role in the direction of bond markets and mortgage rates. In addition to the Employment report the Consumer Sentiment report will be closely watched as well.

The bright spot in the economy has been the consumer so any signs of weakness for consumers would be concerning to the Fed. A significantly weaker than expected report could help push mortgage rates lower heading into next week.

Employment Report:

Expectations are for 165,000 jobs created after last months report of 224,000 jobs created. Earnings increase expectations are for 0.2% increase.

The report came in at:

  • 164,000 jobs created
  • 0.3% increase in wages
  • 3.7% unemployment rate

Last months job creation number was revised down from 224k to 193k and the average work week hours continues to decline (last month it came in at 34.4 and this report came in at 34.3).

Overall the report had little to no impact on bond markets and mortgage rates.

Consumer Sentiment:

Expectations are for a reading of 98.4. Strong consumer sentiment is an important part of the economy; economist keep an eye on this as a good measurement for how strong the consumer is when it comes to buying goods and services.

The reading came in at 98.4 and had no impact on mortgage rates.

Consumer Inflation Expectations:

Expectations are for a reading of 2.6% for both the 1y and the 5y report. Inflation is important to Mortgage Backed Securities and mortgage rates. While it’s unlikely this report will have a serious impact on MBS and mortgage rates it is interesting to see how consumers see inflation over the long term.

The 1y reading came in at 2.6% and the 5y reading came in at 2.5%. The reports had no impact on mortgage rates.

JB Mortgage Capital, Inc.:

We offer industry low mortgage rates for both refinance and purchase transactions, personal one-on-one service and we have an A+ rating with the Better Business Bureau (BBB). We also have a top rating with the Business Consumers Alliance (AAA).

We utilize the latest technology to ensure a fast closing and Loan Officer Kevin O’Connor has over 14 years of experience as a mortgage professional.

When it comes to mortgage rates please keep in mind that mortgage rates adjust daily; sometimes they adjust multiple times in a day when the bond market is volatile.

Also things like obtaining cash out, lower credit scores, higher Loan-To-Value ratios, rental properties and the subordination of a second mortgage will cause in an increase in your mortgage rate.

To obtain the most up-to-date quote, specific to your loan scenario be sure to contact Loan Officer Kevin O’Connor at 1-800-550-5538 or you can submit a “Contact Us” request on the our website.

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About Loan Officer Kevin O'Connor

About Loan Officer Kevin O'Connor

He is the founder and main contributor of He has over 15 years of experience as a Mortgage Loan Originator (MLO) and is a fully licensed with the state of California and the Nationwide Mortgage Licensing System (NMLS). He has a top rating with the Better Business Bureau and a top rating with Zillow. He continually delivers the results homeowners are looking for; low rates, fast closings and exceptional service: "Helping Homeowners Achieve Their Dreams"  CA DRE #01499872 and NMLS # 247447