The Jobs Report

Keeping You Informed…

 The Jobs Report: Good For The Economy, Awful For Mortgage Rates

   Before this morning’s jobs report, mortgage rates were up 0.375 percent on the week. Post-release, the figure has doubled.  According to the government, the U.S. economy shed just 11,000 jobs in November, a 100,000 job improvement from October and the lowest tally since June 2007. Furthermore, the national Unemployment Rate dropped to 10.0 percent.

The data is building economic optimism on Wall Street, forcing a retracement of the flight-to-quality bets made since October. These safe-haven bond buys dropped rates to their lowest levels of all-time last week. This week, not so much.

There’s a massive MBS sell-off in process. Rates unwound 3 weeks of improvement in the first 3 minutes of trading.

Now, if it seems strange to be talking economic recovery while Americans are still — let’s face it — losing jobs, remember that economic data always needs context and the context here is that Non-Farm Payrolls is a lagging indicator.  This means it’s more of a commentary on past economic events than a prediction of future ones.

The jobs report rarely reflects the economy “right now” as illustrated above.

During the Recession of 2001, job loss peaked in October of that year — 1 month before the recession ended.  Beginning in February, then, even as the economy expanded, job loss continued. It wasn’t until October 2002 that job gains went net positive.

The same pattern emerged earlier this year.

• Job loss peaked in January 2009
• The recession ended in February 2009
• Job losses are continuing even as the economy is growing

And this is why today’s job report, although negative, is still positive.  The numbers were much better-than-expected, further proof that the U.S. economy is in recovery.

Unfortunately for rate shoppers, though, mortgage markets are getting slammed. Already today, rates are up 0.375 percent.

If you’re under contract for a home or otherwise in need of a mortgage, talk to your loan officer about rates as soon as possible. One of the dangerous patterns of which to be concerned is that rates tend to fall slowly and rise quickly.

We had several weeks of rates going lower; it could all unwind in just a day.

“Play like a champion today!”

Joe Bailey - Loan Officer
O.  (831) 689-8500
C.  (831) 251-5167

Joe.Bailey@bankofamerica.com

Posted in Mortgage Market Updates | No Comments »

Trends In Mortgage Rates : What The Fall Season Brings To Rate Shoppers

Mortgage Market Update
From the desk of Joe Bailey

Keeping You Informed…

 Trends In Mortgage Rates : What The Fall Season Brings To Rate Shoppers  

 Like in 2006, 2007 and 2008, autumn 2009 is marked by falling leaves and falling mortgage rates.

The trend looks more like a pattern. 

Based on Freddie Mac data of the last 4 years, 30-year fixed mortgage rates rise from January through August, and fall through fall. There’s 6 weeks left until January.  The clock may be ticking for today’s home buyers and rate shoppers.

Conforming and FHA mortgage rates are sub-5 percent right now and, by most measures, there’s no good reason for it.

• The U.S. dollar is extremely weak — usually a negative force on mortgage rates
• The price of gold reflects a healthy fear of inflation — usually a negative force on mortgage rates
• The stock market is on a tear — usually a negative force on mortgage rates

Furthermore, the economy is no longer in free-fall which is the scenario that dropped rates below 5 percent in the first place.  Mortgage rates are poised to rise and, when they do, they’ll rise in a hurry.

See, that’s the other trend in mortgage rates.  Rates rise much faster than they fall.  Just ask anyone on the wrong side of the Memorial Day Massacre about how that turned out.   As low as rates are now, we could be looking at 7 percent mortgage rates in a flash.

Timing mortgage markets is impossible.

As a homeowner, it’s easy to keep up with rate trends on a weekly basis with the newspaper or the aforementioned Freddie Mac data, but markets move faster than that.  They’re minute-by-minute and ever-changing.  Unfortunately, laypersons don’t get access to mortgage bond data for free.  Even the U.S. Treasury market fails as a proxy anymore.

“Play like a champion today!”
 

Joe Bailey - Loan Officer
O.  (831) 689-8500
C.  (831) 251-5167

JBailey@JoeBailey.biz

Posted in Mortgage Market Updates | No Comments »