Today brings us the release of a couple economic reports. First, we had the release of the ISM index which economists where expecting a reading of 49.5 but the actual reading came in much worse at 43.5. This survey shows that are manufacturing segment is contracting and not expanding as readings under 50 show contraction and over 50 show expansion. Remember the general rule, bad news for the economy is generally good news for lower mortgage rates. We also had the release of construction spending which came in better then expected at a 0.0% change from the prior month. Mortgage backed securites, which opened much higher after yesterdays close, got an additional boost from these reports.

Currenly the Senate is in debate and will vote on the rescue plan brought to us by Sec. Paulson and Big Ben Bernanke. It appears that this important legislation will pass the Senate and be brought to the House of Representatives later this week for them to vote on again with slight changes.

On Friday, we will get the biggest report of the week, and the one report that can move the markets more then just about any other report, nonfarm payrolls. Currently economists are expecting a loss of 105,000 jobs from the prior month and the unemployment rate to hold steady at 6.1%. If these reports come in worse then expected, we should get an additional boost to mbs.

What does this mean for mortgage rates? It has been our opinion that mortgage rates are heading lower. This opinion is based on fundamental and technical analysis of incoming data and historical trends. So, floating right now seems to make the most sense but as always you need to consider your risk tolerance. We have stated many times, it is better to lock a rate when you should have floated then it is to float a rate when you should have locked. We feel the risk to floating is minimal at best and if you must lock, wait to later in the day as lenders will be looking to reprice for the better. Stay tuned to our blog and we will get back to you if things change.