At 8:30 AM on the first Friday of every month – the US Jobs Report comes out. The Non-Farm Payroll numbers, hours worked per week – and a ton of other stuff is included in the report, and we are glued to CNBC watching, month in, month out.
If you are shopping for a mortgage loan, and you are approaching the beginning of the month (read near the first Friday of the month) talk to your loan officer. Should you go ahead and lock? Why? That’s because the Jobs Report moves Mortgage Rates (up and down), month in – and month out.
The labor report came out this morning and was fairly lousy. Only 115k new jobs created in January. The National unemployment rate sits at 6.6%. The yield on the 10 year T-bill (which is one indicator of the way mortgage rates are headed) is down slightly meaning that rates are stable to slightly improved today.
Again, the Jobs Report/ “labor report” is the single largest indicator of the state of the economy i.e. – the state of mortgage interest rates. Remember: Good News for the Economy is Bad News for Mortgage Interest Rates. It sets the tone for mortgage rates in the short term. We never float loans going into a labor report, if we can persuade a borrower to lock in.
Why We Believe Mortgage Interest Rates Are Going Up in 2014
Just last year we had mortgage rates in the low 3% range. Now we sit with rates in the low 4’s, and last month we had 5’s just looming over the fence. Not that any rate below even 7 is bad, but the truth is a lot of it has to do with the economy. However a lot of it has to do with the cost to “manufacture” a loan.
The Jobs Report moves Mortgage Rates, and so does the fact that Regulators are adding layers upon layers of Compliance Regulations on the Mortgage Industry. Guess what….the cost of every new regulation that comes into play, causes Commitment Fees to go higher, and those charges get passed on to the consumer.
All of the new regulations that went into effect this year with Quantitative Mortgages are pretty punitive too. If there’s a mistake in Compliance, it can be very costly for a mortgage lender. So that pushes lenders to build in a hedge to deal with those mistakes, which again raises mortgage rates.
The FHFA recently announced it is adding additional fees to Banks for Fannie and Freddie this Spring. Those fees don’t show on your closing cost statement; but they are seen in higher interest rates being charged, as Banks struggle to cover the additional fees being charged to them.
Read: Regulations are pushing mortgage interest rates higher than they were last year. For the first time, we are also seeing Regulation, and not just Jobs Reports, and GDP numbers, and World Economics move mortgage interest rates.
The Jobs Report for December was even worse than the one for January. Because of the massive number of folks who have been snowed in during February, there’s concern that the Jobs Report for February will be pretty weak as well. This is part of the “Bad News” in the Economy is Good News for Mortgage Rates we were talking about.
Thirty year mortgage rates, especially for Government Backed Loans, have been moving lower over the past week and are right now slipping into the high 3’s, + or – , depending on each of the myriad of mortgage loan variables, type of loan you are getting, and so forth.
If this economy begins to recover, with even the slightest hint of improvement, mortgage interest rates will climb to over 6% in a heart beat.
GOOD NEWS, especially if a First Friday Jobs Reports comes in significantly higher, can cause mortgage rates to go up more than a .75% in a Morning.
So at this point our position is to take a very conservative stance on the future of lower mortgage rates… and we advise our clients to remember that the Jobs Report moves Mortgage Rates.
Many folks have been sitting on the fence waiting for lower mortgage rates, hoping that mortgage rates would drop back below the 4% range. With this recent dip in mortgage rates, we’ve seen a BIG uptick in activity – and what history is telling us is this… As mortgage rates dip, activity increases – and Sellers can ask more for their house.
Remember this, as you are thinking about when you want to get “in the market” for a Mortgage. We will only know when rates were at the lowest point… AFTER THEY HAVE GONE UP!!!!!
Our experience tells us that you’ll be more upset if rates go up and you miss what you could have gotten.
The best time to buy a home is right this minute. If you’ve been on the fence – hop off. Mortgage payments are not likely to be this low for many years to come!
So what are you waiting on? Tired of Renting? Buy a House!
Interested in buying a home in NC, or refinancing your mortgage? Want the Best Mortgage Rates? Call Steve and Eleanor Thorne 919 649 5058. We have our finger on the market, we will remind you that Jobs Report moves Mortgage Rates, and we will help find you the very best program to save your family money!
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