Labor Day Rate Watch...

For those loyal readers you will recall a post I published about two weeks ago referencing labor day weekend as a pivot point to pay attention to. I also mentioned that I was not going to go into details because despite markets being cyclical, we're in anything but a normal environment and watching and depending on cycles in this market could spell certain doom.

That's not to say we completely abandon them. So what does labor day typically mean for interest rates and home loans. In the past, experience has shown rates typically fall after labor day and remain low through the winter months. It's hard to believe we could fall much lower - 4.25% on a 30 year fixed currently offered at no cost for qualified borrowers - but the fact remains, mortgage backed securities are posting gains which lead to lower yields and better rates for borrowers.

Usually moving into a long weekend we will see bond markets hedge and sell off so they do not have to worry about the markets, and they can enjoy themselves over the holiday. Then come Tuesday they reassess and reinvest based on those assessments. Today (although it is still early) we have not see the sell off that is typical with long weekends, instead we've seen a strong buying trend which is very bullish for our markets.

Couple this with the unemployment report which showed non farm payrolls adding 0 jobs - that's zero - and claims that the 10 year yield may fall to 1.5%, and you've got a road paved to lower rates.

Of course, nothing is certain and assured until you've got your rate locked into a period in which you can close, and we're not the type to count our chickens. For this reason, I highly suggest those interested begin getting paperwork in place so they can take advantage of the low rate environment that is coming.