Payroll #'s are down...

Mortgage and Lending with WR Starkey Mortgage, LLP.
Friday's bond market opened is trading in positive territory after this morning's employment figures added more fuel to the economic recession debate. The stock markets opened in negative territory before moving into positive ground. However, those gains were short-lived as the major indexes are now well into negative territory. The Dow is currently down 97 points while the Nasdaq has fallen 8 points. The bond market, which also has seen plenty of volatility this morning, is currently up 9/32. But, despite those gains I am expecting to see an increase in this morning's mortgage rates of approximately .250 of a discount point compared to yesterday's morning rates due to severe weakness late yesterday.

The Labor Department said early this morning that the U.S. unemployment rate slipped to 4.8% last month when it was expected to rise to 5.0%. However, the drop is being attributed to a smaller workforce that is available to work rather than fewer people fili ng claims for benefits. The average earnings reading matched forecasts at up 0.3%, therefore, did not heavily influence trading.

The good news for bonds and mortgage shoppers came in the new payrolls number. The report revealed that the economy lost 63,000 compared to the gain of 25,000 that was forecasted. This was the worst monthly move in payrolls since March 2003 and signals that the employment sector may be in for some difficulty in the near future. This is very good news for mortgage rates because it further eases concerns about economic growth. We still have concerns about inflation to deal with, but today's news can actually be considered very good for mortgage rates.

Today's data has not changed my mind about mortgage rates. I am still not as optimistic as some people are about the direction they may be heading. The volatility over the past few weeks underscores my theory that there is no clear base or support for rates or the securities that drive mortgage pricing. Accordingly, I still fee it is prudent to err on the side of caution and recommend seriously considering locking an interest rate if still floating. This may change in the near future, but today's data did nothing to change my mind.

Next week brings us the release of a few important pieces of economic news, but they don't start until mid-week. Look for more details on next week's events and economic news in Sunday's weekly preview.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Lock if my closing was taking place between 21 and 60 days... Lock if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

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Chris McDonald

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