THE BASIS POINT

WeeklyBasis 10/01/07: October Rates Depend on Jobs Report

 

Rates for conforming fixed, conforming ARMs and jumbo fixed are about .125% lower since the Fed cut both the bank-to-bank Fed Funds Rate and the Fed-to-bank Discount rate by .5% on September 18. With the next Fed meeting at the end of this month, it’s important for everyone to remember: Fed rate moves are not directly correlated to mortgage rates. Fed rates influence but do not dictate mortgage rates. Over the weekend there were rumblings of lower jumbo rates from big lenders like Wells Fargo and Countrywide, but this morning’s rate sheets didn’t show noticeable change. Without question, this week’s market moving news is Friday’s jobs growth report. Consensus estimates are calling for 100,000 new jobs for September, but after the economy created a net negative 4,000 jobs for August (the first post-credit crunch data we saw), this number seems optimistic. If the actual number comes in below 100k, rates will drop, and markets could move in a modest trading range until the October 31 Fed meeting. If it’s above 100k, rates will rise, and trading will be a lot more volatile for the month – because then investors really won’t know what to expect from the Fed.

Conforming ($200,000 – $417,000) – NO POINTS
30 Year: 6.375% (6.515% APR)
5/1 ARM: 6.375% (6.515% APR)
7/1 ARM: 6.5% (6.65% APR)

Jumbo ($417,001 – $650,000) – NO POINTS
30 Year: 7.25% (7.39% APR)
5/1 ARM: 6.5% (6.65% APR)
7/1 ARM: 6.625% (6.775% APR)

 

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