Non-Farms Payroll

What’s News for Mortgage Rates This Week: August 9th

Last week it was all about jobs and it wasn’t Steve Jobs.

In case you missed it, last Friday’s Jobs Report showed that 131,000 jobs were lost in the month of July. Even worse was the fact that June’s employment report was revised showing nearly 100,000 more jobs were lost than originally reported.

Where does this leave the economy and the real estate industry?

Without jobs, there will be no consumer spending which accounts for nearly 70% of the economy. Without jobs, consumers lack the confidence to buy big ticket items such as a house. There is definitely no doubt that without jobs, there is no economic recovery.

Even last week it was reported that Personal Savings had increased again. An increase in Personal Savings sounds like a good thing. Unfortunately, an increase in savings means that money is not being spent in the economy.

The economic reports to keep an eye on this week to get a sense of consumer’s willingness to spend will be Retail Sales and the Consumer Price Index (CPI) at the end of the week.

Before these two critical economic reports on Friday, every analyst and arm-chair economist will be listening to what Ben Bernanke and the Federal Reserve board members have to say tomorrow.

There is still much debate on the state of the economy and an economic recovery. The Federal Open Market Committee meeting will hopefully provide keen insight as to the mindset of how and when the Federal Reserve will get us there.

This is What’s News for Mortgage Rates This Week: August 9th.

Quick general rule of thumb when keeping an eye on mortgage rates.

Strong Economic News: $$$ from Bonds —> Stocks = Home Loan Rates Worsen

Weak Economic News: $$$ from Stocks —> Bonds = Home Loan Rates Improve

Want to see what other economic reports might impact home buyers and home refinance options in the coming week? Visti the Mortgage Market Update and check out the Economic Calendar.

Non-Farms Payroll

Obama’s Right. Jobs Report Wasn’t As Bad As The Headlines

In June, for the first time since December 2009, the U.S. workforce shrank.

According to the Bureau of Labor Statistics, the economy shed 125,000 jobs last month even as the Unemployment Rate dropped to 9.5 percent. The drop in the Unemployment Rate is being attributed to fewer Americans looking for work.

At first glance, the jobs report looks weak but a deeper look shows something different.

Excluding the 225,000 government Census workers that recently left the workforce, the total number of employed persons actually grew by 83,000 in June. That’s 50,000 more working Americans as compared to May.

And, since the start of the year, the U.S. workforce has grown by 857,000.

Jobs growth is closely tied to economic growth because more working Americans means more disposable income which, in turn, stokes consumer spending. Job growth is better than job loss.

Consumer spending makes up the majority of the U.S. economy so as consumer spending grows, investor mentality tends to shifts toward “return on principal” (i.e. stock markets) from “safety of principal” (i.e. bond markets).

A move like this is often bad for home affordability because falling demand for bonds is tied to higher mortgage rates. In addition, demand for homes is likely to increase with the growing number of Americans earning a paycheck. Thereby helping to push home prices higher.

The June jobs report therefore should be bad for rate shoppers and home buyers in Valparaiso Indiana. Fortunately, the markets aren’t reacting that way. Mortgage rates for now are slightly improved since the jobs report’s release.

Perhaps Wall Street is watching the wrong figures, but don’t let that be your loss. If you’re shopping for a mortgage, a home, or both, now may be your best time while rates are still low and with home prices down. Make a move before traders change their tune and you lose your window of opportunity.

Non-Farms Payroll

What’s Ahead for Mortgage Rates This Week: June 7th

Rate shoppers caught another break last week as mortgage markets improved on weak jobs data.

The May Non-Farm Payrolls report fell well short of expectations while ongoing jobless claims rose.  The two combined to cast doubt on the speed of the U.S. economic recovery, hurting stocks and helping bonds.

Conforming and FHA mortgage rates in Indiana dropped for the fifth time in six weeks and, once again, rates are trolling back near all-time lows.

No doubt you’ve heard that before — “mortgage rates at all-time lows”.  Mortgage rates have dipped to these levels four times in the last 19 months. However, on each occasion, it wasn’t long after touching bottom before rates reversed higher.

• November 2008 : Roughly 90 minutes
• March 2009 : Roughly 6 hours
• May 2009 : Roughly 1 day
• May 2010 : Roughly 3 hours

This week, rates could stay low for a matters of hours, or days — we can’t really know. Especially with no “major” data due for release.  Instead, most of this week’s economic news is incidental. That means that mortgage markets will move based on trader sentiment and “gut feel”.

The good news is that the market momentum is currently in the rate shoppers’ favor. We entered the weekend with rates falling and they look poised to open Monday no worse.

Here’s a look at what’s ahead this week:

• Monday: Consumer credit, a critical piece of consumer spending
• Wednesday : The Beige Book, a regional economic report from the Fed
• Thursday : Initial and continuing jobless claims
• Friday : Retail Sales and the Consumer Sentiment report

Market sentiment is a strange animal. One minute it can be your friend and, the next, it can be your enemy. Opinions change swiftly on Wall Street and so do mortgage rates. 

If you’re still not locked in, consider making your move. Rates have a lot farther to rise than they do to fall. You won’t want to be on the wrong side of the bet when rates start rising.

Non-Farms Payroll

Jobs Report Gives Temporary Boost To Home Affordability

On the first Friday of each month, the Bureau of Labor Statistics releases its Non-Farm Payrolls data from the month prior. 

The release is more commonly called “the jobs report” — a major factor in mortgage rates and monthly payments.

Especially now.

With the recession officially over and growth returning to the U.S. economy, the recovery’s next frontier is jobs. As job growth increases, home affordability should take a hit.  Here’s why:

1. As the number of working Americans increases, so should total consumer spending
2. As consumer spending increases, so should a return to risk-taking on Wall Street
3. As risk-taking returns to Wall Street, bond markets should start to lose

Mortgage rates, therefore, should rise.

Furthermore, as the jobs market stabilizes and recovers, renters should be more apt to buy their first home, and homeowners should be apt to up-size.  More home buyers in Munster Indiana means more competition for homes and higher home prices typically follow.

Job growth can be trickle-up for housing.

Today, however, the jobs data was not so strong. According to the government, 431,000 jobs were created in May, but of those new jobs, 95.4% represented temporary staffing for the 2010 Census.  The number of private-sector jobs created fell well short of expectations and Wall Street is voting with its dollars right now.  Mortgage bonds are gaining so, therefore, rates are falling.

The May 2010 jobs report may not reflect well on the economy, but home affordability in Indiana and around the country is improving because of it.

Non-Farms Payroll

What’s Ahead for Mortgage Rates This Week: June 1st

Mortgage markets worsened last week as concerns of a global debt crisis lessened and stock markets rebounded. The gains in stocks came at the expense of bonds — including mortgage bonds. 

Conforming and FHA mortgage rates rose in Indiana for the first time in 5 weeks, pulling mortgage pricing off its best levels of the year.

The best mortgage rates of last week were locked Tuesday morning.

This week, mortgage rates may rise even more. In addition to the release of May’s jobs report and consumer confidence data, fears of broader economic slowdown appear to be easing.

Day-by-day, the chances of rates rising are real. 

On Tuesday, a consumer confidence survey is released. Consumer confidence is linked to economic growth because 70 percent of the economy is based in consumer spending. In theory, as consumer confidence grows, the economy should, too. 

Therefore, a strong reading should push mortgage rates higher.

On Wednesday, Pending Home Sales and Auto Sales data is released for last month. Both items are “big ticket” and will reflect on consumer confidence. Strong readings should be rough on rates.

On Thursday, jobless claims data hits the wires along with worker productivity stats.  These two releases normally don’t carry much weight, but with the jobs market in focus this year, markets will be watching for clues about Friday‘s big report — the May Non-Farm Payrolls.

Anything can happen when the jobs report is released. 

An estimated 290,000 jobs were created in April and economists think more than a half-million people re-entered the workforce in May.  This is good for the economy, of course, but can drag on mortgage rates.  If job growth even comes close to the 500,000 marker, mortgage rates could zoom higher.

Mortgage rates moved higher last week but are still very low. If you’ve been thinking about refinancing your mortgage, you probably shouldn’t put it off much longer.  Talk to your loan officer today — the longer you wait, the more that rates can rise.