Archive for the ‘Jobs’ Category

« Older Entries
Newer Entries »

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

Thursday, December 2nd, 2010

Non-Farm Payrolls Nov 2008-Oct 2010Mort­gage rates 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 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.

Tags:
Posted in Jobs | 16 Comments »

Today’s Jobs Report Will Keep Mortgage Rates Highly Volatile

Friday, November 5th, 2010

Net Job Gains Oct 2008 - Sept 2010Mort­gage rates 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 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% Unem­ploy­ment 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.

Tags:
Posted in Jobs | 11 Comments »

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

Friday, October 8th, 2010

Net Job Gains Oct 2008 - Sept 2010On the first Fri­day of each month, the Bureau of Labor Sta­tis­tics releases its Non-Farm Pay­rolls 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 jobs report”, the government’s non-farm pay­rolls data influ­ences stock and bond mar­kets, and, in the process, swings a big stick with home afford­abil­ity fig­ures 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 around the coun­try should improve as a result. 

Tags:
Posted in Jobs | 8 Comments »

« Older Entries
Newer Entries »