Chris Simms, Certified Mortgage Planner with Pulaski Bank of St. Louis and Preferred home lending has this to say about the market activity this past week:

As you might have heard the Fed dropped the prime rate by .25 basis points leaving the Fed funds rate at 2% and the prime rate at 5%.  Usually that means the bond market is boinb to raise rates because of inflation concerns.  In this case it helped bonds move in the right direction on Thursday morning and lower rates.  Then Friday morning the jobs report came out and expectations were for a 75K loss in jobs.  Instead they came in at a 20K loss.  This is still not good news.  The economy needs to create about 150K jobs a month to keep up with the population growth but instead we still hsaw a loss, so why did the bond market knee jerk react this morning pushing rates back to 6% and in some cases 6.125%?  Simply emotions, stock investors are feeling that the worst is over and so shortly things are going to be turning around.  So a 20K loss is much better than expectations of 75K loss.  So needless to say they reacted and moved the market again.  Since the open this morning they have come back a little but they are still up and driving our rates up.  The good news with the Fed is that they don't see any reason to continue lowering rates meaning inflation will have a chance to come under control.  (May be gas will come down then).  The largest reason for our gas prices is the weakening dollar driven by the rate cuts.  The rest of the world doesn't have the inflation jump that we have had over the past six months with Gas and food.  That will help bonds gain some strength.  At the same time the market isn't out of the woods yet but that only provides more strength for investors to invest in bonds and lower our mortgage rates.

Hang in there we are feeling that the volatility we have been experiencing might settle down and bring some consistency.

If you would like to contact Chris with your questions he may be reached at 314.229.4242 or via e-mail at csimms@pulaskibankstl.com