Unemployment Rate Archives - Shoreline Mortgage

1 08, 2013

Fed Meeting Statement Positive For Ongoing Mortgage Sector Support

There was potentially good news for mortgage rates on Wednesday as the Fed’s Federal Open Market Committee (FOMC) announced that its quantitative easing (QE) program would remain unchanged for the present.

Economists expect the Fed to begin tapering the amount of QE toward the end of the year in accordance with Chairman Ben Bernanke’s previous statements that “tapering” would likely begin near year-end.

No specific date for reducing the QE assets purchases was given.

Chairman Bernanke has previously indicated that the Fed will closely review domestic and global economic developments as part of its decision-making process for changing the QE program. Wednesday’s FOMC statement reaffirmed this plan.

Fed Cites Economic Expansion and Improving Labor Conditions

The FOMC statement cited modest economic expansion, improving labor markets and continued high unemployment levels as a basis for continuing its current level of QE.

The Fed’s mandate requires it to support price stability and low unemployment; reversals in these or other economic areas could cause the Fed to continue its QE at present levels. At present, economists expect QE to end in mid-2014.

The FOMC statement also indicated that the target federal funds rate will remain between 0.00 and 0.25 percent at least until the national unemployment rate falls to 6.50 percent. Chairman Bernanke did not give a press conference after Wednesday’s statement was released.

Quantitative Easing: Monthly Purchase of MBS, Treasury Securities Intended to Control Mortgage Rates

The Fed currently purchases $40 billion in mortgage-backed securities (MBS) and $45 billion in Treasury securities monthly. These purchases are intended to control long-term interest rates including mortgage rates.

When the Fed begins tapering and eventually concludes these asset purchases, demand for MBS and Treasury securities are expected to fall and their prices will likely fall as well. When prices for bonds include MBS fall, mortgage rates traditionally rise.

With mortgage rates recently moving up, reducing the level of the Fed’s QE asset purchases is cause for concern. Higher mortgage rates make homes less affordable; the combination of rising home prices and mortgage rates presents challenges for first-time home buyers and others without sufficient funds for meeting higher down payments and monthly mortgage payments.

Now would be a very good time to ask your trusted mortgage professional for a personal review of your mortgage situation. Give them a call and ask for your private assessment today.

9 01, 2013

27 Months Of Consecutive Job Growth Helping Home Prices Rise

Job growth helping housing recovery 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:

Health Care
Drinking and Eating Establishments
Construction
Manufacturing

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.

3 01, 2013

Post-Fiscal Cliff, Mortgage Markets Turn Attention To Jobs Data

Unemployment Rate Mortgage rates moved higher Wednesday up congressional leaders voted to avoid the “Fiscal Cliff”.

Mortgage-backed securities (MBS) fell as investors bid up stock prices. Confidence among investors and consumers typically causes mortgage rates to rise. That’s what happened Wednesday.

For Thursday and Friday, expect jobs data to dictate where mortgage rates are headed.

The Federal Reserve has said that the national Unemployment Rate will dictate future monetary policy, with the central banker planning to raise the Fed Funds Rate from its target range near zero percent once joblessness falls to 6.5%. Currently, the jobless rate is 7.7 percent.

As the jobs market improves, equity markets should follow, causing mortgage rates to — again — move higher.

Thursday’s Initial Jobless Claims report has already influenced today’s mortgage rates. New claims rose 10,000 to 372,000 for the week ending December 29, 2012. This is slightly higher than Wall Street expected and mortgage bonds are moving better on the news.

Now, Wall Street turns its attention to Friday’s Non-Farm Payrolls report.

More commonly called “the jobs report”, Non-Farm Payrolls is a monthly publication from the Bureau of Labor Statistics, detailing the U.S. employment situation, sector-by-sector. The economy has added 4.6 million jobs since 2010 and analysts expect another 155,000 added in December 2012.

The Unemployment Rate is expected to tally 7.8%.

As more people get back to work, the nation’s collective disposable income rises, which gives a boost to the U.S. economy. Furthermore, more taxes are paid to local, state and federal governments which are often used to finance construction and development — two jobs creators in their own right.

Furthermore, as the ranks of the employed increase, so does the national pool of potential home buyers. With demand for homes high and rents rising in many U.S. cities, demand for homes is expected to grow. Home supplies are shrinking.

If you’re currently floating a mortgage rate, or wondering whether it’s a good time to buy a home, consider than an improving economy may lead mortgage rates higher; and an improving jobs market may lead home prices higher.

The market is ripe for a refinance or purchase today.

31 12, 2012

What’s Ahead For Mortgage Rates This Week : December 31, 2012

Jobs report is due Friday and could move mortgage rates 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.

12 12, 2012

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 :

Retail : 58,000 jobs added
Business and Professional Services : 43,000 jobs added
Healthcare : 20,000 jobs added

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.

1 11, 2012

Find A Mortgage Rate Strategy Ahead Of Friday’s Job Report

Unemployment Rate 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 ? 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.