Mortgage Rates Respond Positively, August 6, 2010

Mortgage Rate Trend Direction:    Down

Economic Reports/Impact:            Monthly Non-farm Payroll, 8:30 AM ET, High Rate Impact

Key News:                                         Change in US Administration's Economic Team     

All eyes have been looking toward today's Non-farm Payroll report.  The direction of mortgage rates today will definitely be based on reaction to this report.  With this in mind, mortgage rates are expected to fall this morning at initial pricing by lenders.

Impact of economic reports

The Non-farm Payroll Report surprised this morning.  Payrolls dropped by much more than analysts had expected sending the stock market down sharply and the mortgage-backed securities market sharply higher.  This will likely improve mortgage pricing by a meaningful amount this morning.  Over the next several weeks markets are likely to adjust to the reality that our economy is slowing fairly dramatically.  A so-called "double-dip" recesiion now becomes a very real possibility.  This would likely take mortgage rates even lower than their current all-time lows.

Impact of international or political events

All international and political news is taking a backseat to world markets reaction to the US Non-farm Payroll results.  A change in President Obama's economic team is not expected to represent any change in policy direction for the Administration.

What if Fannie and Freddie write down the principal of loans they hold?

Check back this afternoon, in my weekly wrap-up, as I give my opinion on this issue that has been the source of rumors this week