Locking Bias

Mortgage bonds have continued their run higher, putting rates as low as we have seen them since last April.  The rally in the bond market has largely been fueled by a substantial drop in the US stock market.  The stock market has largely been influenced lower by the drop in oil prices.  However, the rise in bonds hasn’t been as dramatic as the fall US stocks have experienced.  This makes bond prices susceptible to a drop if oil prices move higher.  With oil still hovering just above $30 per barrel, it seems more likely to see oil prices make a move higher vs experience a significant drop from here.  They have already been hammered, causing many job losses and company closures.

in fact, the slaughtering in the energy sector has been compared to the housing crisis of 2008.  Since we know that eventually things turn around, keep in mind that bonds will be at risk of a move higher when oil prices finally improve.


Tomorrow is the Bureau of Labor Statistics (BLS) Jobs Report for the month of January.  The market is anticipating about 188,000 new jobs reported and for the Unemployment Rate to remain steady at 5%.  Although we feel there is a good chance that the report will prove to be weaker than expected, we really don’t have a lot of conviction in that statement.  ADP did show a surprisingly higher than expected number of job creations.  However, Weekly Unemployment Claims have been on the rise, we are transitioning out of the seasonal hiring of holiday workers, and planned layoff numbers are on the rise.  We will have to wait and see what the actual report brings tomorrow.


Although we are still on a clearly defined upward channel, the risk of floating is becoming increasingly higher.  If you don’t want to take the risk of floating into tomorrow’s Jobs Report, the safe play will be to lock.  If you feel strongly that the report will be weak, you can take the risk and float.  Just be prepared should the market change its current course.


Get your custom rate quote in 30 seconds

See your customized rate and fee options without sharing any personal information

See Purchase Rates See Refi Rates

Additional Articles

Still Need Help?