The Jobs Report : Good For The Economy, Awful For Mortgage Rates

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Before this morning's jobs report, mortgage rates were up 0.375 percent on the week. Post-release, the figure has doubled.

According to the government, the U.S. economy shed just 11,000 jobs in November, a 100,000 job improvement from October and the lowest tally since June 2007. Furthermore, the national Unemployment Rate dropped to 10.0 percent.

The data is building economic optimism on Wall Street, forcing a retracement of the flight-to-quality bets made since October. These safe-haven bond buys dropped rates to their lowest levels of all-time last week. This week, not so much.

There's a massive MBS sell-off in process. Rates unwound 3 weeks of improvement in the first 3 minutes of trading.

Now, if it seems strange to be talking economic recovery while Americans are still -- let's face it -- losing jobs, remember that economic data always needs context and the context here is that Non-Farm Payrolls is a lagging indicator.  This means it's more of a commentary on past economic events than a prediction of future ones.

The jobs report rarely reflects the economy "right now" as illustrated above.

During the Recession of 2001, job loss peaked in October of that year -- 1 month before the recession ended.  Beginning in February, then, even as the economy expanded, job loss continued. It wasn't until October 2002 that job gains went net positive.

The same pattern emerged earlier this year.

• Job loss peaked in January 2009
• The recession ended in February 2009
• Job losses are continuing even as the economy is growing

And this is why today's job report, although negative, is still positive.  The numbers were much better-than-expected, further proof that the U.S. economy is in recovery.

Unfortunately for rate shoppers, though, mortgage markets are getting slammed. Already today, rates are up 0.375 percent.

If you're under contract for a home or otherwise in need of a mortgage, talk to your loan officer about rates as soon as possible. One of the dangerous patterns of which to be concerned is that rates tend to fall slowly and rise quickly.

We had several weeks of rates going lower; it could all unwind in just a day.

For questions about mortgage rates or for what rate you'd qualify,with some notes on your situation. The more you tell me, the faster I can respond with a rate, and my rates are pretty good.