On the first Friday of each month, the Bureau of Labor Statistics publishes the Non-Farm Payrolls report. Commonly called "the jobs report", Non-Farm Payrolls highlights employment changes across 10 private labor market sectors including insurance and finance.
Wall Street watches Non-Farm Payrolls closely -- not just because jobs are linked to the future of the economy, but they're also linked to Federal Reserve policy.
The jobs report also carries significance for today's home buyers and homeowners looking to refinance. This is because the jobs report is linked to¬†today's mortgage rates, too.
The most current Non-Farm Payrolls report -- the one for June 2015 --¬†will be released one day early this month because of the federal holiday. The jobs report will release Thursday.
With a better-than-expected read,¬†mortgage rates and APRs¬†are expected to climb.¬†With a worse-than-expected read, mortgage interest rates are likely¬†to fall.
The Non-Farms Payrolls report is a broad look at the U.S. labor market.¬†By industry, it¬†shows which economic areas are expanding, and which areas are contracting. It also reports the U.S. unemployment rate.
Non-Farm Payrolls is a monthly Wall Street highlight. Job growth is paramount to economic growth, and economic growth drives investment strategy.
Recently, the jobs report's importance has been magnified. This is because the Federal Reserve is actively stimulating the economy and its programs will continue so long as the economy requires it.
Low mortgage rates spur refinances as well, which increase household savings and contribute to higher levels of consumer spending.
Freddie Mac reports the average 30-year fixed rate conventional mortgage rate at 4.02% nationwide.¬†VA mortgage rates¬†and FHA rates are lower.
For most of this year, according to Ellie Mae, VA rates have averaged 30 basis points (0.30%) percentage points below¬†comparable conventional loans; FHA have averaged 20 basis points (0.20%) lower.
Mortgage rates are historically cheap, helping home buyers to purchase homes affordably. Low rates are also helping refinancing households to save hundreds of dollars each month on their payments.
Use the¬†home mortgage calculator¬†to see how much money¬†you¬†can save.
The U.S. labor market is tightly tied to¬†housing.¬†Jobs provide households with income, confidence and capital; and, confident persons are more likely to buy a home or relocate.
Meanwhile, as the number of buyers in a market grows, the supply-and-demand curve shifts, which results in higher prices for sellers and the creation of real wealth. This, too, can boost confidence.
Furthermore, employed persons are also more likely to be mortgage-approved.¬†Even before your first day of work, you can get a loan via the¬†offer letter mortgage.
It's no coincidence that the labor market's recent rebound ¬†has coincided with a rise in U.S. home values.
Nationally, home values are¬†within 1% of last decade's peak¬†and some markets -- including Phoenix, San Francisco and Los Angeles -- ¬†have blown past it.
Rising home prices would typically be bad for a buyer's purchasing power, but with 30-year mortgage rates still near four percent, home affordability remains near its highest point in history.
Homes are selling quickly. Recent data from the National Association of REALTORS¬ģ, for example, shows that¬†45% of all homes sold in 30 days or fewer last month.¬†
With a strong jobs report Thursday morning, mortgage rates are expected rise. You'll get less house for your dollar¬†when mortgage rates are up. It may be prudent to lock a mortgage rate today.
Between 2008-2009, the U.S. economy fell into recession, catalyzed by the failure of Lehman Brothers; the near-collapse of mortgage lending; and the movement of Fannie Mae and Freddie Mac into conservatorship by the Federal Home Finance Agency (FHFA).
7.4 million jobs were eliminated.
Since that period, though, hiring has resumed. 10.9 million jobs have been added back to the U.S. economy -- a 147-percent recovery in terms of "employed persons". Today's¬†jobs may not be of equal pay or stature, but an increase in the number of employed persons is a net-positive.
Furthermore, unemployment rates have dropped, down more than four percentage¬†points.
Should the June¬†job data read¬†stronger-than-expected, the Fed may elect to raise the Fed Funds Rate as soon as September, which would suggest a strengthening U.S. economy. Some believe that an increase to the Fed Funds Rate¬†would result in¬†higher mortgage interest rates.
Analyst calls are for 230,000¬†net new jobs created in June, with estimates ranging from two hundred-two thousand to two hundred-fifty-two thousand.
Consider locking your mortgage rate before the Thursday¬†morning release is made. Rates are expected to change.
In May, the economy added 280,000¬†net new jobs. For June, it's expected to show 230,000. The jobs report releases Thursday¬†at 8:30 AM ET. Today's ultra-low rates could be at-risk.
Want low rates? Your best chance may be to compare and lock rates prior to the Non-Farm Payrolls release. Rates are available for free with no social security number required to get started, and with no obligation to proceed whatsoever.
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
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2015 Conforming, FHA, & VA Loan Limits
Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)