It looks like a new year’s hangover is what’s in store for mortgage rates so far this year. The December jobs report came out today much stronger than expected which caused rates to spike. 256,000 jobs were created vs 160,000 that was expected. An interesting thing to note is that most of the jobs created were under the age of 24. A lot of those jobs are likely part time and seasonal which could be reflected in next months data. There is some talk that this strong data might cause the Fed to not cut interest rates at all this year. Currently there are two rate cuts that are being priced in.

So what does this mean? A lot of what drives interest rates is momentum and right now momentum is not our friend. That can change pretty quicky though as rates have demonstrated over the last six months. Remember rates were over 7% back in July of last year only to drop to around 6% in a couple of months only for rates to jump back over 7% a few months later. This whipsaw effect is probably hear to stay unfortunately. There is a lot of negativity being priced into rates right now which I think has been a bit overdone. That’s not to say rates can’t go higher from here but I do think we will get to a point soon where momentum will start swinging the other way. Inflation data will come out next week so if we get a friendly reading that could help us gain back some ground.

Recap:

-Hotter than expected jobs report caused rates to rise

-The market is only pricing in two rate cuts this year

-Inflation data will come in next week which could also impact rates