Arizona mortgage rates were poised for a big day on Friday. Why? The all important jobs report was due out. The jobs report is seen as a barometer of economic activity. Many experts felt that the jobs report would come in stronger than expected and the rate market would bounce higher in response.
When the data was revealed on 12/6 we saw that just over 200,000 new non-farm jobs were created and that unemployment dropped from 7.3% to 7.0%. Data like this could have and “should have” moved mortgage rates north. Did it? Nope, in fact rates improved by .125% on Friday. Mortgage folks across the country delighted in this surprise movement in mortgage rates.
Why Did Rates Defy Logic?
With the strangeness of the financial and more specifically rate markets lately, one explanation is well the markets are just behaving oddly. However, IMHO there is always some type of answer or at least a theory to why the market does what it does. My theory on last Friday’s movement is that Arizona mortgage rates had already been pre-reactive to the positive economic data. It’s what we call having the jobs data “baked in” to rates already. It means that rates had increased previously in anticipation of such a turn in the economy.
What to Look For Next
Rate direction will heavily depend on the continued direction of the economy and the Fed’s decision to taper Quantitative Easing. My expectation is that the Fed will Taper starting in or around March 2014. All things are subject to change especially with the changing of the guard in the Fed (Bernanke to Yellen) so stay tuned! All in all rates are still great and still near historic lows.
By Jeremy House