In 2008 and 2009, the United States economy turned, leading to a national Unemployment Rate of 10%. During this time, mortgage rates dropped since the Non-Farm Payroll Report indicated that the economy, in the months to come, would conceivably decline.
In a depressed economy, investors often favor assurance of principal over investments with risk. Mortgage-backed securities, which are backed by the U.S. government, met that requirement, and gave investors a good combination of risk and return.
As a result, this lack of job growth pushed FHA and conforming mortgage rates to the extremely low levels they are today. It stands to reason that an increase in job growth would switch that course, and that is precisely what happened last Friday.
At 8:30 AM ET the first Friday of each month, the Bureau of Labor Statistics delivers the Non-Farm Payroll report. This is a sector-by-sector breakdown of U.S. employment, and includes a record of the national Unemployment Rate.
In July, the U.S. economy added one hundred sixty-three thousand net new jobs. This is 63,000 more than Wall Street expected. This burst in numbers has Wall Street racing and mortgage rates climbing. FHA, VA and USDA mortgage rates are all conforming to higher rates, as are jumbo mortgage rates.
Instantly after the Friday’s announcement of the July jobs report, mortgage bond pricing plummeted, thus mortgage rates rose.
It has been nearly 2 months since mortgage rates have been at today’s levels. The July Non-Farm Payrolls has been bad for business where today’s mortgage shoppers are concerned. Markets are taking more risks and mortgage rates are on the rise. It is a bad time to have an unlocked mortgage rate because, although rates are historically low, compared to recent mortgage rates, they seem fairly high.
Despite this recent news, proper perspective is necessary. Even with this increase, rates on conforming 30-year mortgages are still below 4%. However, if you have been floating a mortgage rate, or if you have been “on the fence” in deciding whether or not to purchase or refinance, the time to take action is now!