Weekly Unemployment

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.

Weekly Unemployment

Weekly Economic Releases for Jan. 18th

This holiday-shortened week brings us the release of only one monthly economic report for the markets to digest and it is not considered to be of high importance. This will likely leave the stock markets to be a major influence on bond trading and mortgage rates a good part of the week. Whether this is good or bad news for bonds depends if stocks rally or fall. If stocks move higher, bonds will likely suffer, leading to higher mortgage rates. However, if stocks show weakness, funds may shift into bonds, driving mortgage rates lower.

The financial markets are closed tomorrow in observance of the Martin Luther King Holiday. They will reopen Tuesday morning for regular trading hours. I don’t believe many mortgage lenders will be open tomorrow, but any that are will likely use Friday’s rates or not allow a rate to be locked tomorrow.

Tuesday is Inauguration Day and while I don’t believe the ceremony or President Obama’s speech will directly affect the markets or mortgage rates, it does bring in the new administration, new policies and new theories. Those changes could come into play in the coming weeks and likely influence mortgage rates. Issues such economic stimulus and recovery along with tax and deficit news could create significant volatility in the markets and therefore mortgage pricing.

The week’s only relevant monthly economic data is December’s Housing Starts report early Thursday morning, but I don’t see it causing much movement in mortgage rates. This report gives us an indication of housing sector strength and future mortgage credit demand, but it is not considered to be a heavy influence on bond trading.

Also Thursdays is the Labor Department’s weekly update on unemployment filings. They are expected to show that 548,000 new claims were filed last week. A smaller number is considered negative for bonds while a larger than expected rise is positive. But, this data is also not considered to be of high importance. Since it is one of the only two reports released at all, it may influence trading some but not enough to greatly affect mortgage rates.

Overall, I am expecting a relatively quiet week in the mortgage market. As long as the stock markets remain fairly calm, mortgage rates will probably close the week close to Tuesday’s opening levels.

If I were considering financing/refinancing a home, I would…. Lock if my closing was taking place within 7 days… Lock if my closing was taking place between 8 and 20 days… Lock if my closing was taking place between 21 and 60 days… Float if my closing was taking place over 60 days from now… This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.