27 Months Of Consecutive Job Growth Helping Home Prices RiseComments Off on 27 Months Of Consecutive Job Growth Helping Home Prices Rise
The Bureau of Labor Statistics (BLS) Non-Farm Payrolls report for December exceeded Wall Street’s expectations by 5,000 net new jobs, showing 155,000 positions created in December.
The December tally raised the economy’s 12-month total to 1.84 million net new jobs created nationwide. Jobs added in December mark the 27th consecutive month of job growth.
Job sectors showing the strongest growth to close out 2012 included:
Private-sector hiring is driving the jobs market, too. 168,000 new private sector jobs were added in December. Government jobs fell by thirteen thousand.
Monthly job creation has averaged +153,000 jobs since 12 months ago. It’s a fine measure of growth but economists believe it’s not enough job creation to significantly reduce the national unemployment rate. 14.4 percent of workers are categorized as under-employed.
December’s national unemployment rate was 7.8 percent, representing 4.8 million job seekers. This figure matched Wall Street’s expectations and was equal to November revised unemployment rate of 7.8 percent.
The improving jobs market and national unemployment rate make an impact on both mortgage rates and home prices.
Job creation suggests an expanding economy, which typically leads mortgage rates higher. In addition, with more employed persons nationwide, the potential home buyer pool grows larger, which introduces new demand to the housing market. With more demand, all things equal, home prices rise.
Job growth is one reason why home values climbed more than 5 percent in 2012, according to the Federal Home Finance Agency; and why the national housing supply would be exhausted in fewer than 5 months, at the current sales pace. Demand for homes is high and today’s low mortgage rates are extending buyer purchasing power.
For home buyers, the expanding U.S. economy and steady job growth suggests that home prices may not rocket higher this year, but will continue to increase, little by little.
What’s Ahead For Mortgage Rates This Week : January 7, 2013Comments Off on What’s Ahead For Mortgage Rates This Week : January 7, 2013
Mortgage rates rose during the first week of 2013.
The fiscal cliff crisis was resolved prior to the market’s opening Wednesday, when legislators voted to approve a deal. While many tax cuts were extended for taxpayers earning less than $450,000 annually, other facets of the fiscal cliff issue are yet to be addressed, including budget cuts for federal government agencies.
Investors were surprised to learn that the Fed may end its third round of quantitative easing (QE3) sometimes in 2013. The FOMC meeting minutes for December 2012 suggested that Fed support for its QE3 program has waned as the economy has improved.
First-time jobless claims increased for the week ending December 29, 2012 to 372,000 from the prior week’s 350,000, worse than Wall Street’s consensus opinion of 360,000 new jobless claims.
The December 2012 Non-Farm Payrolls surpassed analyst expectations, posting 155,000 net new jobs for the month. The report also showed the national Unemployment Rate rising one-tenth of one percentage point to 7.8%. When the jobless rate falls to 6.5%, the Federal Reserve is expected to begin raising the Fed Funds Rate from its current target range near zero percent.
Overall, mortgage rates rose by as much as 0.25 percentage points last week. However, because the increase occurred wholly between Wednesday and Friday, Freddie Mac’s weekly mortgage rate survey failed to include it.
Freddie Mac reported the previous week’s average rate for a 30-year fixed rate mortgage was 3.34 percent for borrowers paying 0.7 percent discount points plus closing costs. The average rate for a 15-year fixed rate mortgage was 2.64 percent for borrowers paying 0.7 discount points plus closing costs.
As this week opens, mortgage rates are considerably higher.
This week’s scheduled economic news includes Treasury auctions on Tuesday, Wednesday and Thursday; weekly Jobless Claims report on Thursday; and not much else. There will be planned speeches, however, from five members of the Federal Reserve, including Richmond Federal Reserve President Jeffrey Lacker.
Fed President Lacker was the lone dissenting vote among voting FOMC members in each of last year’s policy votes.
What’s Ahead For Mortgage Rates This Week : December 31, 2012Comments Off on What’s Ahead For Mortgage Rates This Week : December 31, 2012
Mortgage bonds improved last week, pushing mortgage rates lower nationwide.
Positive economic news and strong housing data was trumped by ongoing Fiscal Cliff discussions on Capitol Hill.
The “Fiscal Cliff” is meant to represent January 1, 2013 — the date on which mandatory spending cuts are enacted by Congress and on which tax rates increases for many U.S. taxpayers.
Some analysts believe that if these two events are to occur simultaneously, it would derail the current U.S. economic expansion and revert the economy back into recession. That concern has spurred a flight-to-quality which has benefited mortgage bonds and, therefore, U.S. mortgage rates.
For example, last week, Freddie Mac reported the average 30-year fixed rate mortgage rate at 3.35 percent nationwide for borrowers willing to pay an accompanying 0.7 discount points plus a full set of closing costs. This is a 0.02 percentage point reduction from the week prior.
The average 15-year fixed rate mortgage rate was unchanged last week at 2.66 percent for borrowers paying an accompanying 0.7 discount points plus closing costs.
In this holiday-shortened week, mortgage rates may fade again.
Congress convened over the weekend in order to discuss the impending Fiscal Cliff, and ways to avoid it. Talks have been ongoing since this year’s election yet it appears unlikely that the simultaneous expiration will be avoided.
How this would affect the economy is unknown but mortgage markets would witness an immediate boost of demand, leading mortgage rates lower. Conventional, FHA and VA mortgage rates would all likely benefit.
And then, Wall Street will turn its attention to Friday’s December Non-Farm Payroll report.
Mortgage rates are expected to make big moves upon the report’s release. This is because, earlier this month, the Federal Reserve said it would begin raising the Fed Funds Rate only after the Unemployment Rate reaches 6.5 percent. Currently, the Unemployment Rate is 7.7 percent. If December’s jobless rate slips, moving closer to the Fed’s stated target, mortgage rates are expected to rise.
Similarly, if the Unemployment Rate rises, mortgage rates are expected to drop.
Mortgage Rates Rising On 26 Straight Months Of Jobs GrowthComments Off on Mortgage Rates Rising On 26 Straight Months Of Jobs Growth
According to the Bureau of Labor Statistics (BLS) and its November 2012 Non-Farm Payrolls report, the U.S. economy added 146,000 net new jobs last month.
November’s job growth exceeded Wall Street expectations of 90,000 jobs added for the month, and was a small increase from October’s 138,000 jobs added.
Three job sectors in which employment rose in November include :
It appears that the effects of Hurricane Sandy were muted, although they may be temporarily overshadowed by seasonal factors.
After losing more than 7 million jobs in 2008 and 2009, the U.S. economy has since recovered more than 4.6 million jobs. Job growth has reached 26 consecutive months and is expected to remain consistent through 2013.
In addition, the BLS report showed the national unemployment rate dropping 0.2 percentage points in November to 7.7 percent. This is the lowest Unemployment Rate since January 2009.
Growing employment is a strong indicator of economic expansion, which traditionally leads to rising mortgage rates.
When mortgage people work, more income is earned and more taxes are paid. This often leads to higher levels of both consumer spending and government spending, both of which spur additional hiring and economic expansion.
When the economy is in expansion, equity markets often gain and bond markets often lose. When bond markets are in retreat, mortgage rates rise. This relationship takes on added importance this week with the Federal Reserve’s Federal Open Market Committee (FOMC) scheduled to adjourn.
The Non-Farm Payrolls Report is a top economic indicator and is a key part of economic and policy decision made Capitol Hill and within the Federal Reserve. As one example, recent Federal Reserve stimulus has been specifically aimed at lowering the national Unemployment Rate. As the economy improves and as jobs are regained, the Fed may be less likely to support low rates.
If you’re floating a mortgage rate, consider locking in. Rates can’t stay low forever.
November 2012 Non-Farm Payrolls Report May Show Hurricane Sandy EffectsComments Off on November 2012 Non-Farm Payrolls Report May Show Hurricane Sandy Effects
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 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.
October Jobs Report Blows Away Estimates; Mortgage Rates FallingComments Off on October Jobs Report Blows Away Estimates; Mortgage Rates Falling
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 VA 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 Washington, DC 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.
Find A Mortgage Rate Strategy Ahead Of Friday’s Job ReportComments Off on Find A Mortgage Rate Strategy Ahead Of Friday’s Job Report
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 Washington, DC ? 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.
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