shutterstock_8501056-300x199Mortgage rates for California and rest of the country continue to trend lower. Its at a point where a 30 Year-Fixed rate under 4% can again be a reality.

Last week mortgage backed securities (MBS) improved 95 basis points. Whenever MBS prices go up, mortgage rates go down.

Weaker than expected Employment data caused a large increase in MBS prices again this morning. Against a consensus forecast of 180K, the economy added just 148K jobs in September. The Unemployment Rate unexpectedly dropped from 7.3% to 7.2%, the lowest level since November 2008. The decline was mixed news, though, since it was due to both job gains and to people who left the labor force, meaning that they stopped trying to find a job.

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The weaker employment news means that the investors now think that the Fed wont taper its bond purchase till early next year. The mortgage rates in last 4 years have been kept low by Fed buying MBS. A strong economic news would mean that the Fed would start tapering that purchase which would mean higher mortgage rates. However, most economic news in last 2 weeks have been weaker than expected, hence the mortgage rates have trended lower.

This morning, some of the big banks like Wells Fargo are quoting a 4.25% rate with 1 point. We at Arcus Lending are quoting 3.875% on a 30 year fixed mortgage (4.129% APR) on a California home loan with 1 point on loan amounts under $417,000 with 25% down payment and 740+ credit (additional conditions may apply, rates subject to change without notice).

Next 1-2 months will be a perfect time to consider refinancing if you are currently at a rate higher than 4.375%. After that, depending on the economic news, Fed may consider the tapering of their MBS purchase which can result in higher rates.

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