As Jobs Tally Fades, Mortgage Rates Fall

The U.S. economy is no longer adding new jobs.

Last Friday, in its monthly Non-Farm Payrolls report, the Bureau of Labor Statistics reported that the U.S. economy added exactly zero new jobs in August as the national Unemployment Rate held steady at 9.1 percent.

Despite the "zero" reading, the jobs figures were in the red. This is because the BLS issued revisions to its June and July figures that adjusted the two months of data down by 58,000 jobs.

Economists had expected a monthly reading of +75,000. Their estimates missed.

The weaker-than-expected jobs data fueled a stock market sell-off that pushed stocks down 2.5% and spurred a bond market rally. 

Mortgage bonds -- the securities on which mortgage rates in Raleigh are based -- improved Friday ahead of Labor Day Weekend, and carried that momentum into Monday. While the U.S. markets were closed, global investors snapped up "safe" assets in fear of a second wave of financial crises. Already this year, markets have grappled with sovereign debt concerns in Greece and Portugal.

Now, Italy is facing similar international scrutiny, forcing markets to question the health of the Eurozone.

Concerns like these tend to benefit home buyers and mortgage rate shoppers and that's exactly what we're seeing.

Mortgage rates are falling this week. Rates may reverse quickly, however.

Later this month, the Federal Reserve and White House are each expected to add stimulus to the U.S. economy. If they do, it may push investors back into risky assets including equities at the expense of safe securities. This would spark a bond market sell-off and send rates higher.

Possibly by a lot.

Therefore, if you're currently looking for home or comparing rates between lenders, consider executing sooner rather than later. Mortgage rates are low today, but low rates may not last. And when rates reverse higher, it will likely happen fast.

With The Jobs Report Looming, Mortgage Rates May Rise

If you're shopping for a mortgage rate, today may be a good day to lock one down. That's because Friday morning, the Bureau of Labor Statistics will release its Non-Farm Payrolls report for August 2011.

The "jobs report" tends to have a big influence on mortgage bonds and mortgage rates in Raleigh.

The jobs report is a monthly issuance, providing sector-by-sector analysis of the U.S. workforce. It also report the national Unemployment Rate.

Wall Street expects the August Non-Farm Payrolls data to show 75,000 jobs created in August, down from 117,000 in July; and it expects that the Unemployment Rate will remain unchanged at 9.1%.

The jobs report's connection to mortgage markets is straight-forward -- as jobs go, so goes the economy. This is because when the number of working Americans rises :

1. Consumer spending gets a boost
2. Government tax collection gets a boost
3. Household savings gets a boost

These are each good turns in a recovering economy.

For today's rate shoppers and home buyers, though, it won't be the actual number of jobs created that matter as much as how close that jobs figure is to Wall Street's expectations. If the number of jobs created exceeds the 75,000 estimate, look for mortgage rates to rise.

Conversely, if job creation falls short of 75,000 in August, mortgage rates are expected to rise.

Home affordability remains at all-time lows and mortgage rates do, too. If you've been wondering whether now is the right time to lock a rate, you can remove some risk by locking ahead of Friday's Non-Farm Payrolls release.

The report will be released at 8:30 AM ET.

Strong Job Growth In July Trumped By Credit Downgrade

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 Cary 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.

A Mortgage Rate Strategy For July's Jobs Report

At 8:30 AM ET Friday, the Bureau of Labor Statistics will release the July 2011 Non-Farm Payrolls report. Mark it in your calendar. If you've been watching mortgage rates fall to new all-time lows this week and fear a mortgage rate reversal, Friday could be the day.

The monthly Non-Farm Payrolls data can swing a big stick in mortgage markets.

More commonly called "the jobs report", Non-Farm Payrolls details the U.S. workforce, providing sector-by-sector analysis of workforce, as well as the national Unemployment Rate. 

The jobs report affects mortgage rates because of how important jobs are to the U.S. economy.

When there are more working Americans:

1. There's more consumer spending, a boost to businesses
2. There's more tax collection, a boost to governments
3. There's more personal savings, a boost to households

In July, analysts anticipate 85,000 new jobs created. This would be a 4-fold increase from June's 18,000 figure.

The Unemployment Rate is expected to remain unchanged at 9.2%.

For rate shoppers and home buyers in Florida , these Wall Street expectations can be as important as the actual data itself. Right now, traders placing bets, expecting 85,000 new jobs in July. If the final tally is more than 85,000, traders will load up on equities at the expense of bonds. This is because job growth is good for the economy.

When bonds sell off, rates rise.

Conversely, if jobs growth is less than 85,000, mortgage rates should drop.

Mortgage rates are near all-time lows this morning. By Friday, they could rise. The safe move is to lock your rate today. Rates may fall when the jobs report is released, but there's much more room for rates to rise.

What's Ahead For Mortgage Rates This Week : August 1, 2011

Mortgage markets improved last week as the U.S. debt ceiling debate continued on Capitol Hill. Bonds traded in a range Monday through Thursday before breaking higher Friday morning.

30-year fixed conforming mortgage rates improved in Georgia last week, falling to levels just north the product's all-time low set in November 2010.

5-year ARMs improved last week, too. The benchmark adjustable-rate mortgage's average national rate is now tied with its all-time low, also set last November.

This week, the direction of mortgage rates depends on two events:

1. The resolution of the U.S. debt ceiling debate, due Tuesday
2. The July Non-Farm Payrolls report, due Friday

Mortgage rates will be volatile as markets grapple with the expectations for the above events, and their eventual outcomes. 

Sunday evening, for example, congressional leaders reached an agreement to raise the U.S. debt ceiling by $2.1 trillion, and to introduce $2.5 trillion in budget cuts within 10 years. The deal must pass Congress, however, and until it does, speculation will push mortgage rates around.

Friday's jobs report should swing mortgage rates, too. 

After starting the year strong, the 2011 jobs market has faded. Net new jobs have dropped 5 months in the row and the national Unemployment Rate is climbing. Weak job growth portends weak consumer spending and a weak economy -- typically two outcomes that are good for mortgage rates. 

Because of doubt cast by the debt ceiling debate, though, it's too soon to know how Wall Street will react to the jobs data -- strong or weak.

For now, mortgage rates remain low. They may fall further, or they may not. The "safe bet" is to lock.

Economy Expected To Have Added 80,000 Jobs In June

Friday morning, at 8:30 AM ET, the Bureau of Labor Statistics releases its June Non-Farm Payrolls report. If you're currently shopping for a mortgage, or floating a mortgage rate, be prepared. Mortgage rates can change following the monthly report's release.

Often, by a lot.

More commonly called "the jobs report", Non-Farm Payrolls reports on the U.S. workforce by sector, summarizing its findings in terms of total workforce size, and as a national Unemployment Rate. Jobs are considered a keystone in the continuing U.S. economic recovery. 

More working Americans means:

1. More consumer spending, a boost to businesses
2. More tax collection, a boost to governments
3. More personal savings, a boost to households

For June, analysts expect the government to report 80,000 net new jobs created, and no change in the 9.1% Unemployment Rate.

Although these figures are slightly below than what can be considered "strong growth", that's not what should concern Cary rate shoppers. Mortgage markets react to a deviation from estimates more than to the actual results themselves.

This is because Wall Street placed bets in advance of the jobs report's release. If jobs growth tallies more than 80,000, therefore, it signals better news for the economy than what was expected. This will push banks and investors towards equities, and away from bonds -- including the mortgage-backed kind.

With less demand for mortgage bonds, mortgage rates will rise.

Conversely, if jobs growth is less than 80,000, mortgage rates should fall.

Mortgage rates remain near their lows for the year, but if the June Non-Farm Payrolls report beats estimates of 80,000 jobs made in June, look for mortgage rates to spike. The safe move is to lock today.

What's Ahead For Mortgage Rates : Week Of July 5, 2011

Mortgage markets worsened last week as Wall Street's renewed optimism pushed equities to their best one-week gain in 2 years. The change in  sentiment was bad news for rate shoppers, however, as investors pored into stocks at the expense of bonds.

Last week, for the first time since February, mortgage rates rose 5 days in a row. By the time bond markets closed for the 3-day weekend, conforming fixed mortgage rates in Florida had climbed to their worst levels since mid-May.

Mortgage rates are now at 7-week highs.

The biggest reason for last week's mortgage rate turnaround is that lawmakers in Greece approved a national austerity plan. Reaching an accord on spending cuts and tax increases was a necessary step for the nation-state to avoid defaulting on its debt and falling into bankruptcy.

Until last week, it wasn't clear whether the Greek Parliament would reach this agreement, and this fear is why mortgage rates were down through May and June. Faloout from a default would have created global economic uncertainty and uncertainty tends to be good for mortgage rates.

With agreement reached, though, that uncertainty is minimized. Mortgage rates are reversing. 

This week, the big news will be June's Non-Farm Payroll report, set for release Friday morning. If jobs growth is stronger-than-expected, stock markets should continue to post gains and mortgage rates should continue to rise.

The jobs report is a market-mover. If you're floating a mortgage rate and wondering whether to lock, it may be prudent to lock ahead of Friday's release.

Making A Rate-Lock Plan Before Friday's Jobs Report

Tomorrow morning, at 8:30 AM ET, the Bureau of Labor Statistics releases its Non-Farm Payrolls report for May. If you're floating a mortgage rate right now -- or are in the process of shopping for a loan -- consider locking your rate sooner rather than later.

The Non-Farm Payrolls report can be a major market mover, causing large fluctuations in both conforming and FHA mortgage rates in Apex. It's because of the report's insight into the U.S. economy.

More commonly called "the jobs report", Non-Farm Payrolls is issued monthly. Sector-by-sector, it details the U.S. workforce and unemployment rates. 

Jobs momentum has been strong. Through 7 consecutive months, the economy has added jobs, the government reports. Nearly 1 million new jobs have been created during that time. These are strong figures for a country that lost 7 million jobs in 2008 and 2009 combined.

However, Wednesday, a weaker-than-expected "preview" figure from payroll company ADP has Wall Street wondering whether this month is the month that the winning streak ends.

May's ADP data fell so far short of expectations that investors have had to re-assess their job growth predictions. Earlier this week, the consensus was that 185,000 new jobs were created in May. Today, those estimates are much lower.

The change is leading mortgage rates lower, too.

The connection between jobs and mortgage rates is somewhat straight-forward. Job growth influences mortgage rates because jobs matter to the economy. As job growth slows, so does the economic growth, and that puts downward pressure on mortgage rates.

The opposite is true, too. Strong job growth tends to lead mortgage rates higher.

So, with job growth estimates revising lower, Wall Street has adjusted its "bets" and that's benefiting rate shoppers across North Carolina. Should the actual jobs figures not be so bad, though, expect a quick and sharp reversal; and much higher mortgage rates for everyone.

The safe move is to lock your rate today.

What's Ahead For Mortgage Rates This Week : May 9, 2011

Mortgage markets improved last week on a bevy of economic and geopolitical news. Conforming mortgage rates in Raleigh improved, falling to their lowest levels of 2011.

It's a welcome development for home buyers and rate shoppers nationwide. Mortgage rates were expected to rise throughout most of this year.

There were four big stories that contributed to falling rates last week.

The first was the news that Osama bin Laden was killed. The news was announced over the weekend, and by the time markets opened Monday morning, the price of oil was already falling. Falling oil prices reduce inflationary pressures on the economy and because inflation contributes to rising mortgage rates, the absence of inflation helps them to fall.

This news carried markets to Thursday morning. That's when the Department of Labor announced that Initial Jobless Claims had suddenly and unexpectedly surged to an 8-month high. Last week's report featured the biggest one-week jump in claims in more than 2 years.

This, too, pushed mortgage rates lower, casting doubt on the strength of the U.S. economic recovery.

Then, Friday morning, those doubts were cast aside. When the government released its Non-Farm Payrolls report for April, it showed job creation topping 200,000 for the third straight month. We would have expected mortgage rates to rise on news like this, but they didn't.

Rates fell instead -- mostly because the strength of the U.S. jobs report rendered mortgage-backed bonds more attractive to global investors.

The last story, though, is the one worth watching long-term.

Late-Friday, in response to its growing debt issues, it was reported that Greece may withdraw from the Eurozone. An outcome such as this is unlikely, however, the possibility was enough to spark a flight-to-quality that benefited U.S. mortgage rates. Conforming and FHA rates ended Friday lower, reaching their best levels since December.

This week, there isn't much economic news set for release so the above stories will continue to influence markets and rates. Geopolitics can change quickly, though, so if you're floating a mortgage rate and waiting for the bottom, don't wait too long. Markets can reverse in a snap.

If you see a rate you like, the safest move is to lock it.

Job Growth Returning To "Normal" Levels -- A Bad Sign For Mortgage Rates

Be prepared for Friday morning. Mortgage rates and home affordability could worsen quickly. At 8:30 AM ET, the Bureau of Labor Statistics releases its April Non-Farm Payrolls report and momentum has been strong.

The monthly jobs report is a market-mover and analysts expect that 196,000 new jobs were added last month. If those expectations are exceeded -- by even a little -- Wall Street would take it mean "economic strength" and the stock market would be boosted.

Too bad for rate shoppers, though; a move like that would also lead to higher mortgage rates throughout North Carolina. This is because, coming out of a recession, reports of economic strength tend to push mortgage rates up. We've seen it happen multiple times in the last 8 months.

Since losing more than 7 million jobs between 2008 and 2009, employers have added 1.3 million jobs back to the economy. And we're learning that there's plans for fewer job cuts in the future. It's clear that the jobs market is improving and this is why tomorrow's Non-Farm Payrolls report is so important.

A "weak economy" helped keep mortgage rates low for a very long time. A strengthening economy will reverse that tide.

So, consider your personal risk tolerance today, in advance of tomorrow's Non-Farm Payrolls report. If the thought of rising mortgage rates makes you nervous, call your loan officer and lock in a rate today. Once tomorrow's data is released, after all, the market might look changed.

Retail Sales Report Should Spell Higher Mortgage Rates For Wednesday

Consumer spending is alive and well, it seems -- unwelcome news for today's home buyers. 

Wednesday, the Census Bureau will release its March Retail Sales figures and the report is expected to show higher sales receipts for the 9th straight month. A strong reading like that should spell higher mortgage rates in Raleigh and nationwide.

The connection between Retail Sales and mortgage rates is fairly tight. Retail Sales are "consumer spending" and consumer spending accounts for the majority of the U.S. economy. The U.S. economy, of course, is a dominant force in setting the direction in which mortgage rates are headed.

For example, in 2010, it was a weak economy and murky outlook that helped drive mortgage rates to all-time lows. Since last year, however, the jobs market has started its recovery, monthly receipts have returned to all-time highs, and the Federal Reserve is revising growth estimates for 2011.

Not surprisingly, mortgage rates have reversed, too.

As compared to 6 months ago, conforming rates are higher by 0.750%. Home affordability across North Carolina is taking a hit. Plus, the stronger the economy appears to be, the more likely for mortgage rates to climb more.

It's why tomorrow's Retail Sales report is so important. 

If you're under contract for a home, or even evaluating the merits of a refinance, there's a lot of risk in "floating" your mortgage rate. The more prudent plan is to find a rate at which you're comfortable with the payment, and lock it in.

And you may want to take that lock sooner than you had planned -- if only to protect your monthly payments. Once tomorrow's Retail Sales report hits, it may be too late. Especially if receipts rise for the 10th straight month.

The Retail Sales report is due for release at 8:30 AM ET.

Make A Mortgage Rate Plan BEFORE Friday's Jobs Report

Mortgage rates could move higher beginning tomorrow morning. The Bureau of Labor Statistics releases its February jobs report at 8:30 AM ET.

Home buyers and rate shoppers in Raleigh would be wise to take note. The jobs report is almost always a market-mover.

Consider last month.

Although net job creation fell well-short of expectations in January -- just 36,000 jobs were added -- the national Unemployment Rate dropped to 9.0%, its lowest level in 2 years. The marked improvement surprised economists and sparked inflationary concerns within the investor community.

This, in turn, caused mortgage rates to rise.

In the days immediately following the jobs report's release, conforming rates across North Carolina jumped 0.375 percent. That's equivalent to a mortgage payment increase of $22 per month per $100,000 borrowed.

A similar spike could occur tomorrow.

Wall Street scrutinizes job growth because with more working Americans, there's more consumer spending, and consumer spending accounts for 70% of the U.S. economy. A blow-out number tomorrow would change expectations for the future, and lead rates higher again.

The economy shed 7 million jobs between 2008 and 2009 and has barely made 1 million of them back. Tomorrow, analysts expect to see 183,000 jobs created. If the actual reading is lower-than-expected, mortgage rates should fall and home affordability will improve.

Anything else and mortgage rates should rise. Likely by a lot.

Therefore, if you're shopping for a mortgage right now, consider your risk tolerance. Once markets open tomorrow, you can't get today's rates.

Unemployment Rate Drops To Lowest In 2 Years

Americans are getting back to work. Sort of.

This morning, at 8:30 AM ET, the Bureau of Labor Statistics released its Non-Farm Payrolls report for January 2011. More commonly called "the jobs report", the government's data showed a large decrease in the number of working Americans as compared to December, but a sizable drop in the Unemployment Rate.

The job growth figures were much lower than consensus estimates:

• Expected job growth in January : +148,000 jobs
• Actual job growth in January : +36,000 jobs

January's Unemployment Rate surprised analysts, too, but not in a bad way, falling from 9.4 percent in December to 9.0 percent last month. This is the nation's lowest Unemployment Rate in nearly 2 years.

Today's jobs report is rough news for home buyers and rate shoppers in Apex. Shortly after the report's release, Wall Street is attributing the low jobs number to "bad weather" and is choosing to focus on the strong Unemployment Rate instead.

U.S. stock futures are now rising ahead of open, an increase that will come at the expense of the bond markets. Indeed, mortgage-backed bonds are losing this morning already.

Conforming mortgage rates are expected to start the day at least +0.125% from Thursday's close and, if momentum continues, could tack on an additional +0.125% before today's closing bell.

The government's report is an excellent example of how important jobs data can be to home affordability -- especially in a recovering economy.

The economy shed 7 million jobs between 2008 and 2009 and fewer than 1 million of those were recovered in 2010. It's a data point Wall Street watches closely because more working Americans means more consumer spending, and more consumer spending means more economic growth. Consumers account for 70% of the U.S. economy, after all.

More workers also means more taxes paid to federal, state and local government, and, in theory, fewer loan charge-offs from banks. These, too, keep the economic engine moving forward, spurring more spending and job growth. 

If you have not yet locked a mortgage rate, consider locking one today. On the heels of today's jobs data, 30-year fixed rates will scratch at their highest levels of the year.