Mortgage News in the Carolinas
Posts tagged Non-Farm Payrolls
More Risk To Home Affordability : Friday’s Jobs Report
0200 days
by Geoff Brown
in The Economy
Within the next 48 hours, mortgage rates may get bouncy. The Federal Open Market Committee will adjourn from a 2-day meeting and October’s Non-Farm Payrolls report is due for release.
Of the two market movers, it’s the Non-Farm Payrolls report that may cause the most damage. Rate shoppers across Carolinas would do well to pay attention.
Published monthly, the “jobs report” provides sector-by-sector employment data from the month prior. It’s a product of the Bureau of Labor Statistics and includes the national Unemployment Rate.
In September, the economy added 103,000 jobs, and job creation from the two months prior was shown to be higher by 99,000 jobs higher than originally reported. This was a huge improvement over the initial August release which showed zero new jobs created.
When September’s jobs report was released, mortgage rates spiked. This is because of the correlation between jobs and the U.S. economy. There are a lot of economic “positives” when the U.S. workforce is growing.
- Consumer spending increases
- Governments start more projects
- Businesses make more investment
Each of these items leads to additional hiring, and the cycle continues.
Wall Street expects that 90,000 jobs were created in October 2011. If the actual number of jobs created exceeds this estimate, it will be considered a positive for the economy, and mortgage rates should climb as Wall Street dumps mortgage-backed bonds in favor of equities.
Conversely, if the number of new jobs falls short of 90,000, it will be considered a disappointment, and mortgage rates should rise.
There is a lot of risk in floating a mortgage rate today. The Federal Reserve could make a statement that drives rates higher, and Friday’s job report could do the same. If you’re under contract for a home or planning to refinance, eliminate your interest rate risk.
Lock your mortgage rate today.
What’s Ahead For Mortgage Rates This Week : October 11, 2011
0221 days
by Geoff Brown
in Mortgage Rates
Mortgage markets worsened last week as safe haven buying eased and demand for mortgage-backed bonds dropped. As in most weeks since March 2011, Greece and U.S. jobs dictated market direction.
Conforming mortgage rates in Carolinas rose last week, lifting rates off their all-time lows and causing consternation among the nation’s would-be buyers and refinancers.
Last week’s action may surprise you. After all, Freddie Mac’s weekly mortgage rate survey said average, 30-year fixed rate mortgages had dipped, dropping to 3.94% — the first time the average rate reported sub-4 percent.
A keen eye, however, revealed the another truth.
Yes, the average 30-year fixed rate mortgage did go sub-4 percent, but, in order to get those rates, applicants were suddenly required to pay 0.8 “discount points”. This is an increase of 0.1 discount points from the week prior, a change in loan cost thatr reduces the benefit of falling mortgage rates.
1 discount point is equal to 1 percent of your loan size.
All of that is history now, however,. Rates climbed each day last week and are now at their pre-Labor Day levels. The Refi Boom may not be over, but it may be stalled.
This week, mortgage rates may continue to climb. There is talk within the Eurozone that Germany and France will come to Greece’s aid, and that a plan will be solidified prior to November 3. This would boost stock markets at the expense of bonds, leading to higher mortgage rates.
In addition, last week’s strong employment data has renewed speculation that the U.S. economy is, in fact, healthy so analysts are now watching for Friday’s Retail Sales data.
Because consumer spending is an economic catalyst, if Retail Sales shows strength, mortgage rates should rise.
And, lastly, there is a 10-year Treasury auction Wednesday. Mortgage bonds don’t mirror the treasuries, but when demand is strong for treasuries, it’s often strong for mortgage-backed bonds, too. Therefore, a strong auction of government debt will help hold mortgage rates down.
A weak auction should lead rates higher.
A Mortgage Rate Strategy Ahead Of Friday’s Jobs Report
0227 days
by Geoff Brown
in The Economy
Mortgage rates are prepped to make big moves in the next 36 hours. Is it time for you to call in your rate lock?
Friday, at 8:30 AM ET, the Bureau of Labor Statistics will release the Non-Farm Payrolls report for September. Issued monthly, the ”jobs report” offers sector-by-sector job creation figures from the month prior, and reports on the national Unemployment Rate.
Last month, exactly zero net new jobs were created, the government said. This month, economists expect a net 60,000 new jobs created.
Depending on where the actual monthly figure falls, FHA and conforming mortgage rates in Charlotte may be volatile. The jobs reports tends to have out-sized influence on the mortgage bond market.
The connection between the jobs market and the mortgage market is fairly straight-forward. As jobs go, so goes the economy. This is because more working Americans leads to a stronger economic base.
- When more people work, consumer spending grows
- When more people work, governments collect more taxes
- When more people work, household savings increases
Each of these items are strengths to a recovering economy.
For rate shoppers, Friday’s job report could cause mortgage rates to rise — or fall. If the actual number of jobs created exceeded the 60,000 consensus estimate, look for mortgage rates to climb.
Conversely, if new jobs fell short of 60,000, expect that rates will drop.
Home affordability is at all-time highs because mortgage rates are at all-time lows. If you’re under contract for a home or looking to refinance, eliminate some of your interest rate risk. Lock ahead of Friday’s Non-Farm Payrolls release.
Get your rate lock in today.
Strong Job Growth In July Trumped By Credit Downgrade
0283 days
by Geoff Brown
in The Economy
More Americans are getting back to work.
The latest Non-Farm Payrolls survey from the Bureau of Labor Statistics shows that 117,000 net new jobs were created in July, thumping analyst estimates and surprising Wall Street investors.
In addition, May and June’s originally-reported figures were both revised higher:
- May 2011 was revised higher by 28,000 jobs
- June 2011 was revised higher by 28,000 jobs
The national Unemployment Rate slipped to 9.1 percent.
The jobs report’s strong readings would typically be a boon to stock market and a threat to mortgage rates. This is because more employed Americans means more disposable income spent on products and services; and more taxes paid to governments at the federal, state and local level.
This combination fuels consumer spending and supports new job growth, a self-reinforcing cycle that spurs economic growth and often to draw investors into equities.
This month, however, the market reaction has been decidedly different.
Since the Friday release of the July Non-Farm Payrolls report, the Dow Jones Industrial Average has lost close to 6 percent of its value. Furthermore, mortgage bonds — which typically sink on a strong jobs figure — have thrived.
High demand for mortgage-backed bonds have pushed mortgage rates below their all-time lows set last November; the biggest cause of which is Standard & Poor’s credit downgrade of U.S. government-issued debt.
Ironically, the credit rating downgrade sparked a surge of safe haven bidding that has been tremendous to rate shoppers and home buyers in Charlotte and nationwide. Bond buyers are flocking to the U.S.
If you’ve been shopping for a mortgage, therefore, or recently bought a home, use this week’s action to your advantage. Call your lender and ask about rates. You may be surprised at what you find.
