How to Lock a Mortgage Rate- A Rate Strategy For July’s Jobs Report

How to Lock a Mortgage Rate- A Rate Strategy For July’s Jobs Report

Net new jobs, 3-month rolling average 2000-2011

At 8:30 AM ET Friday, the Bureau of Labor Statistics will release the July 2011 Non-Farm Payrolls report. Mark it in your calendar if you are buying or refinancing a home. If you’ve been watching mortgage rates fall to new all-time lows this week and fear a mortgage rate reversal, Friday could be the day.

The Market Mover

The monthly Non-Farm Payrolls data can swing a big stick in mortgage markets.

More commonly called “the jobs report“, Non-Farm Payrolls details the U.S. workforce, providing sector-by-sector analysis of workforce, as well as the national Unemployment Rate.

The jobs report affects mortgage rates because of how important jobs are to the U.S. economy. Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. Thus moving interest rates.

When there are more working Americans:

  1. There’s more consumer spending, a boost to businesses
  2. There’s more tax collection, a boost to governments
  3. There’s more personal savings, a boost to households

In July, analysts anticipate 85,000 new jobs created. This would be a 4-fold increase from June’s 18,000 figure.

The Unemployment Rate is expected to remain unchanged at 9.2%.

For rate shoppers and home buyers in Pleasanton and across the Bay Area, these Wall Street expectations can be as important as the actual data itself. Right now, traders placing bets, expecting 85,000 new jobs in July. If the final tally is more than 85,000, traders will load up on equities at the expense of bonds. This is because job growth is good for the economy.

When bonds sell off, rates rise.

Conversely, if jobs growth is less than 85,000, it should trigger a sell off on Wall Street mortgage rates should drop.

Conventional and FHA mortgage rates are near all-time lows this morning touching levels late last year; AGAIN. By Friday, they could rise. The safe move is to take the gift while in hand and lock your rate today. Rates may fall when the jobs report is released, but there’s much more room for rates to rise.

Give me a call today-

I love to work with readers that find my information on the Mortgage and Housing Market helpful in your decision making process. As a Mortgage Planner at Vintage Mortgage Group in Pleasanton I am in a unique position to help you capitalize at any point in the market. Contact me below today to help you with your purchase or refinance.

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