Nov 1, 2012 | The Economy
Friday morning, the government’s Bureau of Labor Statistics will release its Non-Farm Payrolls report, more commonly called the “jobs report”.
Depending on how the jobs data reads, FHA and conforming mortgage rates may rise, or fall. This is because today’s mortgage market is closely tied to the U.S. economy, and the U.S. economy is closely tied to job growth.
Economists expect that employers have added 125,000 net new jobs to their payrolls in October 2012, up from September’s tally of 114,000 net new jobs. Jobs have been added to the economy over 24 consecutive months leading into Friday’s release, and approximately 4.7 million jobs have been created in the private sector since early-2010.
So, what does this mean for home buyers and refinancing households throughout Massachusetts ? It means that mortgage rates may get volatile beginning tomorrow morning.
Improving jobs numbers tend to push mortgage rates up, as it signals to investors that the U.S. economy is strengthening. If the actual jobs reports shows more than 125,000 net new jobs created, therefore, look for mortgage rates to rise.
Conversely, a weaker-than-expected report injects fear into the market, causing investors to purchase safer assets including U.S. Treasury bonds and mortgage-backed bonds. This moves mortgage rates lower.
Markets will also watch for the monthly Unemployment Rate. After falling to a 4-year low of 7.8 percent in September, economists anticipate that October’s unemployment rate will rise 0.1 percentage point to 7.9%.
The good news for rate shoppers is that mortgage rates remain low. Freddie Mac’s weekly mortgage rate survey puts the 30-year fixed rate mortgage below 3.50% nationwide for borrowers willing to pay 0.7 discount points. Furthermore, a forecast from the Mortgage Bankers Association predicts that the 30-year fixed rate will remain below 4% for at least the next 8 months and low mortgage rates help to keep home payments low.
The Bureau of Labor Statistics releases the jobs report at 8:30 AM ET Friday.
Oct 4, 2012 | The Economy
It’s a dangerous time for home buyers in Worcester County area to be without a locked mortgage rate.
Friday morning, at 8:30 AM ET, the government releases its Non-Farm Payrolls report for September. More well-known as “the jobs report”, Non-Farm Payrolls data has the power to move mortgage rates up or down.
Unfortunately, ahead of the release, we can’t know which.
Last year, job growth more than doubled between August and September. If this year shows that same growth, Worcester County area mortgage rates are expected to rocket higher.
The connection between rising jobs and rising rates is a chain reaction-type link, and is often quite tight.
Jobs are a growth engine for the U.S. economy and mortgage rates are “made” based on future expectations for the U.S. economy. In general, when the economy is improving, it draws Wall Street into “risky” investments and away from “safe” ones.
Meanwhile, mortgage-backed bonds — especially those from Fannie Mae and Freddie Mac — are considered to be among the safest investment assets available. Therefore, as the size of the U.S. workforce swells, and economic projections increase, Wall Street tends to divest itself of its mortgage bond holdings which, in turn, increases the supply of mortgage-backed bonds for sale.
With more supply, all things equal, mortgage bond prices fall and this causes mortgage rates to rise.
This is why the September jobs report is important to today’s home buyers and mortgage rate shoppers. A better-than-expected tally will result in higher mortgage rates.
In August 2012, the government reported 96,000 net new jobs created — a sharp decrease from the month prior and a figure just shy of the metric’s six-month moving average. The Unemployment Rate fell one-tenth of one percent in August to 8.1%.
For September, economists expect to see 120,000 net new jobs created, and no change in the national Unemployment Rate.
Sep 7, 2012 | The Economy
Beginning as soon as next week, new, mandatory mortgage fees will push mortgage rates higher throughout Worcester County area and nationwide. Fannie Mae and Freddie Mac are raising their respective “guarantee fees”.
Guarantee fees are fees that mortgage-backed securities providers charge to lenders for mortgage-related services including the bundling, selling and reporting of mortgage-backed bonds.
Guarantee fees are also used to insure providers against credit-related losses.
As announced by the Federal Housing Finance Agency, effective for all conforming loans delivered to Fannie Mae or Freddie Mac, beginning November 1, 2012, guarantee fees will be raised by an average of 10 basis points per loan.
Conforming mortgages already average close to 30 basis points in guarantee fee per loan. (more…)
Jul 13, 2012 | The Economy
When the calendar flips to a new year, analysts and economists like to make predictions for the year ahead.
So, today, with the year half-complete, it’s an opportune time to check back to see how the experts’ predictions are faring (so far).
If you’ll remember, when 2011 closed, the housing market was showing its first signs of a reboot. Home sales were strong, home supplies were nearing bull market levels, and buyer activity was strong.
Homebuilder confidence was at its highest point in 2 years and single-family housing starts had made its biggest one-month gain since 2009.
In addition, 30-year fixed rate mortgage rates had just broke below the 4 percent barrier and looked poised to stay there. (more…)
Jul 5, 2012 | The Economy
Friday morning, the Bureau of Labor Statistics will release its Non-Farm Payrolls report. More commonly called “the jobs report”, Non-Farm Payrolls is a monthly market-mover.
Depending on the strength — or weakness — of the data, mortgage rates will change. Perhaps sharply. Unfortunately, we can’t know in which direction.
If you’re actively shopping for a mortgage in Worcester County area , therefore, today may be a prudent day to lock a mortgage.
The job report’s connection to mortgage rates is straight-forward. As the number of U.S. citizens earning paychecks increases, reverberations are felt through the economy.
First, higher levels of income are tied to higher levels of consumer spending and consumer spending accounts for the majority of the U.S. economy. More working citizens, therefore, builds a larger overall economic base.
Next, as the overall economic base grows, businesses produce and sell more goods, necessitating the hiring of additional personnel and the purchase of more raw materials — both positives for the economy.
And, lastly, as more paychecks are written, more taxes are paid to local, state and federal governments. These taxes are often used to fund projects and purchase goods and services which, in turn, grow the economy as well.
Tying it all together, the health of the U.S. economy is a major factor is setting day-to-day mortgage rates across Worcester County area. This is why rate shoppers face risk with tomorrow’s Non-Farm Payrolls report.
Between 2008 and 2009, the economy shed 7 million jobs. It has since recovered 3.9 million of them and, Friday, analysts expect to see another 100,000 jobs created in June. If the actual number of jobs created exceeds this estimate, look for mortgage rates to rise.
If the actual number of jobs created falls short of 100,000, mortgage rates may fall.
The government releases Non-Farm Payrolls data at 8:30 AM ET Friday.
Jun 5, 2012 | The Economy
For the second straight year, the jobs market looks to be slowing into the summer.
Last Friday, in its monthly Non-Farm Payrolls report for May 2012, the Bureau of Labor Statistics reported 69,000 net new jobs created, plus a one-tick rise in the national Unemployment Rate to 8.2%.
2012 is shaping up like 2011, it appears.
Last year, between May and August, the jobs market was decidedly worse as compared to the rest of the year, adding just 80,000 jobs on average per month as compared to 190,000 new jobs created on average during each of the other 8 months.
This year, a similar slowdown may be in store.
Although the May jobs report marks the 20th consecutive month during which the U.S. economy added new jobs, the reported figure fell well short of analyst (more…)
