Little Change in Mortgage Rates

While investors continued to closely watch the events in the Middle East, there were
few new developments there during the week. As a result, this week's important
economic data had the greatest influence on mortgage rates. Daily volatility was
high as investors reacted to the major economic reports, but mortgage rates
ended the week essentially unchanged.

Much stronger than expected economic data during the week caused investors to prepare
for the possibility that the economy is growing more rapidly than expected. The
Chicago PMI manufacturing index rose to the highest level since July 1988, and the ISM Services index
rose to the highest level since August
2005. Weekly Jobless Claims dropped to the lowest level since May 2008. Meanwhile, the Fed's Beige
Book reported that many companies were passing through price increases due to
rising commodity prices. As expected, mortgage rates reacted to the data by
moving higher.

The results from Friday's Employment report
were strong, but they did not exceed expectations. Against a consensus fore
for an increase of 200K jobs, the economy added 192K jobs in February. The
Unemployment Rate declined to 8.9% from 9.0% in January. The gains were strong
nearly across the board, with the exception of the government sector. Over the
longer-term, the private sector must produce new jobs to sustain a recovery, so
strength in the private sector was a good sign for the future. Average Hourly
Earnings, a proxy for wage growth, fell short of expectations, remaining
unchanged from January. Some investors were prepared for a much higher jobs
number, and the on target results prompted a reversal of the rise in mortgage
rates from earlier in the week. By Jeff Shealy