Mortgage rates moved higher for the second day in a row yesterday as investors took profits and set up positions for the release of Non-Farm Payrolls data today. As a reminder, when mortgage-backed securities prices move lower, lenders are forced to offer higher mortgage rates. If MBS prices move higher, lenders can offer lower mortgage rates because they can sell loans in their pipeline of loans for a higher price. Below is the chart I used earlier this week to illustrate this relationship... GREEN is MBS prices and RED is mortgage rates Today was a major event for the mortgage rates outlook. For almost the entire month of December, the bond market reflected a "worst is behind us" economic perception. Long term Treasury yields moved considerably higher, pushing mortgage rates over...(read more)

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