San Diego Mortgage Rates Update 03/05/2010

When reviewing the week ending today San Diego mortgage rates were all over the place. Lenders raised rates, lenders lowered rates and sometimes they did both on the same day.  Yet, ahead of the most influential economic report released by the government (Unemployment) rates ended the week where they started!

The Bureau of Labor Statistics released the monthly Employment Situation report this morning.  This is the single most important piece of monthly economic data released to the market because consumer spending accounts for the vast majority of our economic growth. Market participants track jobs as a way to gauge consumer demand and economic activity.   If the number of unemployed Americans is moving higher, more people are without a job and therefore without stable income. This drains consumer demand and forces companies to keep costs low to stay in line with falling revenues. High unemployment is bad for stocks and as we know generally what is bad for stocks is good for bonds and San Diego mortgage rates.

This report gives us four different readings:

1. Nonfarm Payrolls -  totals the number of jobs lost or created in the prior month. Consensus Forecast: 50,000 jobs lost
2. Unemployment Rate – the percentage of able Americans who are out of work. Consensus Forecast: 9.8%
3. Average Hourly Earnings – shows the monthly change in the hourly wages. Consensus Forecast: +0.2%
4. Average Work Week – shows the average amount of hours worked weekly. Consensus Forecast: 33.7 hours

The results:

1. Nonfarm Payrolls: 36,000 jobs were lost. This was much better than expectations. January was revised worse from a first reported loss of 20,000 jobs to a loss of 26,000. December data was revised from -150,000 to -109,000
2. Unemployment Rate:  9.7%. Better than expected.
3. Average Hourly Earnings: 0.1%. worse than expected
4. Average Work Week : 33.8 hours, better than forecast.  This is important since the more hours worked leads to higher paychecks which gives workers more money to spend into the economy.

San Diego mortgage rates did not react well to this much better than expected jobs report. Following the economic data release, the 10 year Treasury yield rose and mortgage-backed security prices plummeted. Lenders who had already released rate sheet were forced to reprice for the worse (raise rates)  while other lenders delayed rate sheets until the bond market found stable ground. As the day progressed mortgage-backed security prices continued to decline which forced many lenders to reprice for the worse again. However, after the lunch hour, MBS prices then began to improve and eventually rallied enough to recover a good portion of early price losses. This allowed a few lenders to reprice for the better (lower rates) but not a many did so.

When the dust settled my wholesale lenders issued San Diego Mortgage rate sheets about where they were yesterday. The 30 year fixed rate remains in the 4.75% to 5.00% range for well qualified consumers.  Well qualified assumes a credit score of 740 or higher, loan to value at 80% or less and pay all closing costs including an estimated one point loan origination/discount/broker fee.  Check back frequently for news affecting San Diego Mortgage rates.