Make A Mortgage Rate Plan BEFORE Friday’s Jobs Report

Filed under Jobs by on March 3, 2011 at 7:47 am {no comments}

Unemployment Rate 2008-2011 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 would be wise to take note. The 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 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 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.

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Unemployment Rate Drops To Lowest In 2 Years

Filed under Jobs by on February 4, 2011 at 7:47 am {no comments}

Non-Farm Payrolls (2009-2011)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 ”, the government’s data showed a large decrease in the number of working Americans as compared to December, but a sizable drop in the 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 Chicago. 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 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.

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December’s Job Report : Good For Home Affordability

Filed under Jobs by on January 7, 2011 at 7:47 am {no comments}

Non-Farm Payrolls (Jan 2009-Dec 2010)On the first Friday of each month, the Bureau of Labor Statistics releases its report.

More commonly called “the ”, the government’s data include raw employment figures and the Rate.

The jobs report hit the wires at 8:30 AM ET today. It’s making big waves in the mortgage market and may help home affordability for buyers in Oak Park this weekend, and would-be refinancers across Illinois.

For this month, and for the rest of 2011, employment data will figure big in mortgage markets.

7 million jobs were lost in 2008 and 2009. Fewer than one million jobs were recovered in 2010. For the economy to fully recover, analysts believe that jobs growth is paramount.

Consider how job creation influences the economy:

  1. More jobs means more income and more spending
  2. More spending means more business growth
  3. More business growth means more job creation

It’s a self-reinforcing cycle and, as business grows, the economy expands, pushing stock markets higher. This tends to lead higher, too, because bonds can lose their appeal when stock markets gain.

According to the government, 103,000 jobs were created in December, and October’s and November’s figures were revised higher by a net 50,000 jobs for a total of 153,000 new jobs created. Economists expected a net gain of 135,000.

The Unemployment rate fell to 9.4, its lowest level since mid-2009.

Wall Street is voting with its dollars right now. Mortgage bonds are improving, pointing to slightly lower mortgage rates today.

The December jobs report was “average”, and home affordability is improving.

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Mortgage Rates Rapidly Rising On Jobs Data; More Risk Ahead For Friday

Filed under Jobs by on December 2, 2010 at 7:46 am {no comments}

Non-Farm Payrolls Nov 2008-Oct 2010 are rising, up nearly 1 percent since mid-October. Tomorrow, rates could rise again.

The Bureau of Labor Statistics releases the November jobs report at 8:30 A.M. ET Friday. With a stronger-than-expected reading, mortgage rates should continue their climb, harming home affordability across Illinois and nationwide.

And already, Wall Street is bracing for big results.  Here’s why.

Wednesday, payroll processor ADP said that 98,000 private-sector jobs were created in November. The figure was a complete blowout reading as compared to analyst estimates, which had the results in the 50,000 range. But that wasn’t all. ADP re-measured and re-reported October’s gains, too. It found that 84,000 jobs were created — not the 43,000 on its original report from 30 days ago.

If jobs growth is the keystone to economic recovery, the ADP report suggests that recovery is already underway.

It’s bad news for rate shoppers. A faltering economy helped keep mortgage rates low. A recovering one should make rates rise. And, that’s exactly what happened Wednesday.

In response to the ADP report, conforming mortgage rates posted their third-worst day of the year. Rates climbed as much as 0.375 percent throughout the day as lenders scrambled to keep up with a deteriorating market.

At some banks, rates changed 4 times between the market’s open and close.

Tomorrow, analysts expect the government to report 146,000 jobs created in November. Mortgage markets and home affordability have a lot riding on the actual results. A lower-than-expected reading should lead mortgage rates lower. Anything else and mortgage rates should rise. Likely by a lot.

Therefore, if you’re shopping for a mortgage right now, or floating a loan that’s in-process, think about your personal risk tolerance and whether you want to gamble against rates moving higher. Once Friday morning’s report is released, it may be too late to lock something lower.

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Today’s Jobs Report Will Keep Mortgage Rates Highly Volatile

Filed under Jobs by on November 5, 2010 at 5:46 am {no comments}

Net Job Gains Oct 2008 - Sept 2010 have been falling since April, shedding more than 1 percentage point since the Refi Boom began. Today, that momentum could lose some steam.

The Bureau of Labor Statistics releases the October jobs report at 8:30 A.M. ET. With a stronger-than-expected reading, mortgage rates should rise, harming home affordability in Illinois and nationwide.

As cited by the Fed earlier this week, jobs are a key part of economic growth and growth affects mortgage rates.

Looking back at jobs, starting in January 2010, after close to 24 consecutive months of job loss, the economy added jobs for the first time since 2007. It started a small jobs winning streak. By May — boosted by the temporary census workers — monthly job growth reached as far north as 431,000 jobs.

That figure then slipped negative in June and has yet to turn-around.

This month, economists expect 61,000 jobs lost and 9.6% Rate.

Jobs matter to the U.S. economy. Among other reasons, employed Americans spend more on everyday goods and services, and are less likely to stop payments on a mortgage. These effects spur the economy, stem foreclosures, and promote higher home values.

The reverse is also true. Fewer workers means fewer disposable dollars and, in theory, a slowing economy. Weak jobs data should spur a stock market sell-off which should, in turn, help lead to mortgage rates lower.

Strong jobs data, on the other hand, should cause mortgage rates to rise.

The stronger October’s employment figures, the higher mortgage rates should go.

Mortgage rates have been jumpy this week because of the Federal Reserve and its new support for bond markets. Today’s employment report should add to the volatility.

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Jobs Data Shows Private Sector Growth, Hints At Lower Mortgage Rates

Filed under Jobs by on October 8, 2010 at 7:46 am {no comments}

Net Job Gains Oct 2008 - Sept 2010On the first Friday of each month, the Bureau of Labor Statistics releases its report from the month prior.  This month, though, because the first Friday of the month was also the first day of the month, the report was delayed one week.

The report hit the wires at 8:30 AM ET this morning.

More commonly called “the ”, the government’s non-farm payrolls data influences stock and bond markets, and, in the process, swings a big stick with home affordability figures in Chicago and nationwide.

Especially in today’s economic climate.

Although the recession has been deemed over, Wall Street remains unconvinced. Data fails to show the economy moving strongly in one direction or the other and, absent job creation, economists believe growth to be illusionary.

Consider:

  1. With job creation comes more income, and more spending.
  2. With more spending comes growth in business
  3. With growth in business comes more job creation

And the cycle continues.

The prevailing thought is that, without jobs, consumer spending can’t sustain and consumer spending accounts for two-thirds of the economy. No job growth, no economy recovery.

But there’s another angle to the jobs report, too; one that connects to the housing market. As the jobs market recovers, today’s renters are more likely to become tomorrow’s homeowners, and today’s homeowners are more likely to “move-up” to bigger homes. This means more competition for homes at all price points and, therefore, higher home values.

And that brings us to today’s jobs data.

According to the government, 95,000 jobs were lost in September. Economists expected a net loss of 5,000.  However, if public sector jobs are excluded from the final figures, jobs grew by 64,000.  This is a positive for the private-sector, but still trailed expectations.

Wall Street is voting with its dollars right now and mortgage bonds are gaining, improving mortgage pricing.

So, although the September 2010 jobs report doesn’t reflect well on the economy overall, home affordability in Illinois and around the country should improve as a result. 

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August 2010 Jobs Report Pushes Mortgage Rates Higher

Filed under Jobs by on September 3, 2010 at 7:46 am {no comments}

Net Job Gains Sept 2008-August 2010On the first Friday of each month, the Bureau of Labor Statistics releases data for the month prior. 

The data is more commonly called “the ” and it’s a major factor in setting for residents of Illinois and homeowners everywhere. Especially today, considering the economy.

This is because, although it’s believed that the recession of 2009 is over, there’s emerging talk of new recession starting.

Support for the argument is mixed:

  1. Job growth has been slow, but planned layoffs touch a 10-year low
  2. Consumer confidence is down, but beating expectations
  3. Consumer spending is weak, but not declining

In other words, the economy could go in either direction in the latter half of 2010 and the jobs market may be the key. More working Americans means more paychecks earned, more taxes paid, and more money spent; plus, the confidence to purchase a “big ticket” items such as a home.

Jobs growth can provide tremendous support for housing, too.

Today, though, jobs growth was “fair”. According to the government, 54,000 jobs were lost in August, but that reflects the departure of 114,000 Census workers.  The private sector (i.e. non-government jobs), by contrast, added 67,000. 

In addition, net new jobs was revised higher for June and July by a total of 123,000.  That’s a good-sized number, too.

Right now, Wall Street is reacting with enthusiasm, bidding up stocks at the expense of bonds — including mortgage-backed bonds.  This is causing mortgage rates to rise.  Rates should be higher by about 1/8 percent this morning.

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Markets Ignore The April Jobs Report And It’s Good News For Mortgage Rates

Filed under Jobs by on May 7, 2010 at 8:52 am {no comments}

Unemployment Rate 2007-2010On the first Friday of every month, the U.S. government releases its report. 

More commonly called “the ”, Non-Farm Payrolls is a major market mover. The number of working Americans is directly tied to the health of the economy which, in turn, drives the stock and bond markets.

In general, when jobs numbers improve, it’s good for stocks and bad for mortgage bonds. It follows, therefore, that conforming in Illinois rise because rates always move opposite of mortgage bond prices.

Conversely, when jobs numbers worsen, it tends to be bad for stocks and good for mortgage bonds.  Mortgage rates fall.

Today, markets are behaving a bit differently.

Despite 290,000 jobs created in April 2010 — nearly twice the expected amount — and a 40 percent upward revision of March’s numbers, mortgage rates are essentially unchanged. 

In a normal environment, rates would be higher.  Today is not normal.

Today is a departure because, for all of the jobs report’s import to Wall Street, it’s less important to markets than what’s happening in Greece right now.

Greece is struggling to meet its debt obligations and its citizens are rioting.

Until a debt solution for Greece is made that sticks, unrest in the region will drive safe haven buying both domestically and abroad. U.S. mortgage bonds will gain on that movement because mortgage bonds are “safe”, and mortgage rates will fall.

Indeed, this is exactly what’s been happening since the start of April. Mortgage markets have been rallying for 5 weeks.

So, today’s jobs news is terrific for the economy and mortgage rates should be rising because of it.  But, they’re not. Consider taking advantage — lock in a rate.

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FHA Loan Rates & The Jobs Report

Filed under Jobs by on March 4, 2010 at 7:47 am {no comments}

have improved over the past few weeks, but tomorrow’s could send them much higher.

The official report is the “” report and it is one of the most widely watched economic indicators.  Wall Street watches this report and it is usually a driver for some of the most volatile days of the year.

Tomorrow at 8:30 Eastern, we start what will likely be a volatile day.   Expectations are for a net job loss of around 30,000.  More might push the FHA loan rate a little lower, anything less could send rates much higher very fast.

Jobs drive the economic recovery.  Employed Americans spend more and default on mortgages less.  Positive readings on the job market draws money out of mortgage bonds and into stocks.  When that happens, go higher.

Mortgage rates hit the streets around 9:30 EST so expect tomorrow’s rate sheets to reflect the results of the jobs report.  Today’s rates are incredible and have the potential to jump much higher with only a slightly better than expected result.

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