Unemployment Rate

January Jobs Report Key to Mortgage Rates & Home Prices

On the first Friday of every month, the U.S. government releases its Non-Farm Payrolls data from the month prior. The data is more commonly known as “the jobs report” and it swings a big stick on Wall Street.

Especially now — many analysts believe job growth is tightly linked to the future of the U.S. economy.

Therefore, when January’s jobs report hits the wires at 8:45 AM ET tomorrow, home buyers in Northwest Indiana would do well to pay attention. A net job reading that is much higher (or lower) than Wall Street’s expectations can make a serious change in home affordability in Chesterton, Crown Point, Highland, Munster, Portage, Saint John, Schererville and Valparaiso.

Wall Street expects that the economy added 13,000 jobs last month.  It would mark the second time in 3 months that the jobs report showed a net monthly gain.

In November 2008, the economy added 4,000.

Jobs matter to the economy for a lot of reasons, but one of the biggest is that when Americans are working, Americans are buying and consumer spending accounts for 70 percent of the economy.

Job growth spurs the economy and draws money to the stock market. Unfortunately for rate shoppers in Northwest Indiana, that kind of stock market growth happens at the expense of the bond market which is where mortgage rates are made.

Good jobs data usually means higher mortgage rates.

Also, job growth can lead to higher home prices. This is because working homeowners are less likely to default on a mortgage versus non-working homeowners.  In this way, job growth helps hold foreclosures to a minimum which, in turn, suppresses the housing supply.

Less supply means higher prices for home buyers in Northwest Indiana.

Mortgage rates are idling this morning in advance of tomorrow’s data.  If you’re shopping for a mortgage rate in Northwest Indiana, the prudent play may be to lock your rate before the jobs data is released.  A jobs figure that’s higher than the 13,000 expected could cause rate to rise sharply.

Contact Benchmark Mortgage in Northwest Indiana to Qualify for Your FREE FHA Home Loan Approval Today!

Unemployment Rate

Jobs Report Wasn’t All Bad – Mortgage Rates Did Fall

Despite the headlines, it’s important to remember that December’s jobs report wasn’t all bad news. 

Sure, the economy shed 85,000 jobs last month and the Unemployment Rate failed to dip below 10%, but for home buyers and rate shoppers , the news was just fine.

The soft employment data led mortgage rates lower, making homes more affordable for buyers.

There is two sides to every economic coin.

Since early-2008, the U.S workforce has been closely tied to home financing. As the economy slowed and jobs were lost, Wall Streeters pulled money from the risky stock markets and moved it to of the relative safety of bond markets, instead.

Safe haven buying led mortgage bond prices higher which, in turn, caused rates to fall. Mortgage rates fell to 6 all-time lows in 2009. In a related statistic, 4.2 million jobs were lost last year.

And this is why Friday’s non-farm payrolls report was so good for buyers.

See, in November, the economy added new jobs for the first time since 2007, housing looked strong, consumer confidence was growing.  The safe haven buying reversed and mortgage rates took off.  Analysts believed the nation’s economic turnaround was complete.

But now, after December’s jobs report returned to the red, Wall Street is forced to rethink its position. Safe haven buying is back and mortgage rates are lower because of it.

Over the next few months, expect a lot of this back-and-forth action in rates. In general, positive news for the economy will be met with higher mortgage rates and negative economic news will be met with lower mortgage rates.  There will be exceptions, but the general rule should hold.

Need more expert advice? Ask the team of Certified Mortgage Planning Specialists at Benchmark Mortgage.

Unemployment Rate

Falling Unemployment Rate = Higher Mortgage Rates

This morning’s jobs report is causing mortgage rates to rise, capping a week during which rates have already jumped 3/8 percent off all-time lows.

The government’s November Non-Farm Payrolls report reinforced the notion that the recession is nearly over, if not over already.

Just 11,000 jobs were lost last month – much fewer than analysts had expected – as the Unemployment Rate fell to 10.0%.

If it seems strange to be talking economic recovery while Americans are still losing jobs - 7.2 million since 2008 -  remember that data always needs context.

See, analysts view employment figures as a lagging indicator for the economy.  This is because business owners tend to make hiring decisions based on how business has been - not on how it will be at some point in the future.

The jobs report rarely reflects the “right now”.  As an example, job loss peaked in January 2009 - 4 months after the height of the financial crisis. 

We saw the same pattern during the Recession of 2001. 

According to government data, during the last recession, job loss peaked in October 2001 but the recession ended the very next month.  It wasn’t until October 2002 that employment went net positive on a monthly basis.

And this is why investors are cheering November’s jobs report. Better-than-expected numbers and a falling Unemployment Rate show that the economy is improving.

Unfortunately for rate shoppers, better-than-expected data is pushing mortgage rates higher.  Rates have opened 0.250% higher versus yesterday’s close.

Need more expert advice? Ask the team of Certified Mortgage Planning Specialists at Benchmark Mortgage.

Unemployment Rate

July Jobs Data Is Weak, But Strong Enough To Sock Mortgage Rates

This morning’s jobs report is doing a number on mortgage rates, putting another dent in home affordability nationwide.

Despite the slightly flat Unemployment Rate, the government’s July Non-Farm Payrolls report reinforced the notion that the recession may be ending soon, if it hasn’t already.

Just 247,000 jobs were lost last month — much fewer than analysts had expected.

Now, if it seems strange to be talking economic recovery while Americans are still losing jobs — 5.7 million in the last 12 months, in fact — remember that we have to take the data in context.

Job loss doesn’t lead to economic growth, per se, but analysts tend to treat employment data as a lagging indicator.  Business is often slow to hire and slow to fire, so the jobs report rarely reflects the “right now”.

A terrific real-world example of jobs data as a lagging indicator is that the peak of recent job loss — January 2009 — occurred 4 months after the peak of the financial crisis in September 2008.

The same pattern was present during the Recession of 2001. 

Government data shows that job loss peaked during the recession in October 2001, 1 month before the recession’s official end.  Meanwhile, job losses continued nationwide for the next year and didn’t turn net positive until October 2002 — nearly 12 months into the recession’s subsequent recovery.

This is what we mean by lagging indicator and it’s why investors are cheering today’s jobs data.  Strength in today’s report may be signaling the end of the recession. 

Unfortunately for today’s rate shoppers, it pushing mortgage rates higher.  As stock markets soar, bond markets sink.

Unemployment Rate

What’s Ahead For Mortgage Rates This Week: June 8th

The economy posted stronger-than-expected data last week, reigniting fears of inflation on Wall Street.

The positive-slanted economic news caused conforming mortgage rates to rise by another 1/2 percent last week.

It marked the second week in a row of soaring mortgage rates and the fifth week out of six that rates have moved higher.

Conforming mortgage rates are now as high as they’ve been all year and rest at the levels of December 2008.

The biggest news of last week is likely to influence mortgage rates this week, too.

On Friday, we learned that 345,000 Americans lost their jobs in May. And while that’s an awfully large number, it wasn’t nearly as bad as Wall Street had expected. Furthermore, the Unemployment Rate spiked to over 9 percent.

Now, again, with respect to the Unemployment Rate, the number looks bad, but the data may be a positive. This is because the Unemployment Rate measures Americans in the workforce versus the unemployed actively looking for jobs.

If the number of people trying to re-enter the workforce starts to surge, it’s basic math that Unemployment Rates will rise. This is what some economists think happened last month and it served as the backdrop for Friday’s rate surge.

With fewer Americans expected to be out of work, consumer spending seems poised to rebound in the months ahead, pushing the economy out of recession sooner than expected. If the sentiment holds this week, mortgage rates should rise even more.

Without much new data this week, markets are likely to trade on emotion — a difficult situation for rate shoppers. Conforming mortgage rates have been extremely volatile since May and are changing every few hours. If you see a rate you like, consider locking it.

Wait around too long, and it’ll be gone.