Dec 6, 2012 | The Economy
Floating a mortgage rate? Consider getting locked Thursday.
ADP released its November 2012 Employment Report Wednesday in which the payroll-processing firm reported 118,000 new jobs created last month.
The company said the service sector created 114,000 new positions, the construction sector created 23,000 new positions, and goods-producing businesses created 4,000 new jobs, among others. There was a 16,000 decline in manufacturing employment.
ADP’s monthly Employment Report can influence mortgage rates. This is because it’s typically released during the same week as the Non-Farm Payrolls report from the U.S. Bureau of Labor Statistics, and can sometimes provide a preview.
The Non-Farm Payrolls report — more commonly called “the jobs report,” is a sector-by-sector breakdown of the U.S. employment situation, which includes changes in the national Unemployment Rate.
In a recovering economy, as jobs go, so goes the economy and, this month, the jobs forecast is clouded because of the effects of Hurricane Sandy.
In its Employment Report, ADP estimates that Hurricane Sandy reduced payrolls by 86,000 jobs across manufacturing, retail, leisure and hospitality, and temporary help industries.
Without Hurricane Sandy, the report may have shown north of 200,000 new jobs.
Prior to Wednesday, Wall Street expected Friday’s Non-Farm Payrolls report to show 93,000 net new jobs created in November, and no change in the U.S. Unemployment Rate. The ADP report did little to change those expectations.
Regardless, Friday’s release remains a market risk to Worcester County area buyers. The jobs report is closely watched because of its links to the broader domestic economy. When more workers are employed, more income is earned, and more money is spent.
This drives economic growth, of course, because consumer spending accounts for 70% of the U.S. economy and when the economy is expected to expand, mortgage rates tend to rise.
If you are currently in the market for, or are undecided about a mortgage, therefore, consider locking your mortgage rate today. If Friday’s Non-Farm Payrolls report shows more jobs created than were estimated, mortgage rates are likely to rise — maybe even sharply.
Non-Farm Payrolls is released at 8:30 AM ET.
Nov 6, 2012 | The Economy
Another month, another good showing for the U.S. economy.
Mortgage rates are performing surprisingly well after Friday’s release of the October 2012 Non-Farm Payrolls report. The Bureau of Labor Statistics’ monthly report beat Wall Street expectations, while also showing a giant revision to the previously-released job tallies of August and September.
171,000 net new jobs were created last month against calls for 125,000 and revisions for the two months prior totalled 84,000.
October also marked the 25th consecutive month of U.S. job growth — a period during which 3.8 million jobs have been reclaimed. This sum represents more than half of the 7.3 million jobs lost between 2008-2009.
Nationally, the Unemployment Rate rose by one-tenth of one percent last month to 7.9%. It may seem counter-intuitive to see unemployment rates rise even as job growth soars. However, it’s a sign of economic strength.
October’s rising Unemployment Rate is the result of more workers entering the U.S. workforce and actively looking for jobs, a manifestation of rising consumer confidence levels and optimism for the future.
Typically, mortgage rates in Worcester County area would worsen on a strong jobs report like this. This month, however, rates are improving. This is mostly the result of Hurricane Sandy, which is expected to create a drag on the U.S. economy with its $50 billion damage tag.
The storm has Wall Street looking past the strong jobs report, positioning itself for the next few months. Investors are moving into less risky assets until the uncertainty surrounding the storm’s effects subside. Mortgage-backed bonds are considered “safe” and are benefiting from this safe haven buying pattern.
For home owners and buyers in Massachusetts and nationwide, the shift is yielding an opportunity to lock mortgage rates at artifically-low levels. 30-year fixed rate mortgages remain well below 3.50% for borrowers willing to pay discount points, and home affordability is approaching an all-time high.
Home values are expected to rise through 2013 so consider this week’s low rates a gift. If you’re in a position to go to contract and/or lock a mortgage rate, you may want to take that step today.
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 9, 2012 | Mortgage Rates
Mortgage markets worsened last week for the first time in a month as the U.S. economy showed signs of improvement, and the Eurozone stepped closer to launching its $500 billion euro rescue fund.
Conforming mortgage rates in Massachusetts rose last week on the whole — even though Freddie Mac’s Primary Mortgage Market Survey proclaimed that they fell.
This occurred because Freddie Mac’s weekly mortgage rate survey is conducted between Monday and Tuesday each week and, last week, mortgage rates were lower when the week began. Through Wednesday, Thursday and Friday, however, they rose.
According to the Freddie Mac survey, the average 30-year fixed rate mortgage slipped to 3.36 percent nationwide last week, while the 15-year fixed rate mortgage fell to 2.69 percent. Both rates required 0.6 discount points and both marked all-time lows.
As this week begins, to gain access to the same 3.36% and 2.69% mortgage rates from last week, Massachusetts mortgage applicants should expect to pay more closing costs and/or higher discount points.
Improving U.S. employment data is partially to blame.
Friday morning, the Bureau of Labor Statistics released its September Non-Farm Payrolls report. More commonly called “the jobs report”, the monthly issuance details changes in U.S. employment by sector and reports on the national Unemployment Rate.
In September, accounting for upward revisions to data from July and August, 200,000 net new jobs were created — far exceeding Wall Street’s estimates for 120,000 net new jobs created. Furthermore, the Unemployment Rate unexpectedly dropped to 7.8%.
Jobs are considered a keystone in the U.S. economic recovery. As a result, when the jobs numbers hit Friday, mortgage rates worsened, building on momentum built earlier in the week as Greece moved steps closer to accepting aid from the Eurozone.
In general, since 2010, weakness in the Eurozone has helped push U.S. mortgage rates lower. As Europe regains its footing, therefore, domestic mortgage rates are expected to rise.
This week, in a holiday-shortened week, there will be little new data to move mortgage rates. The Federal Reserve’s Beige Book is released Wednesday and some key inflation data is due for Friday release. Beyond that, mortgage rates will continue to take cues from the Eurozone.
Mortgage rates remain near all-time lows.
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.
