Mortgage Rates Rise Sharply On January’s Jobs Report

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The Bureau of Labor Statistics released its Non-Farm Payrolls report for January 2011 this morning.

Americans are getting back to work. Sort of.

A Falling Unemployment Rate

More commonly called "the jobs report", the government's data showed a large decrease in the number of working Americans as compared to December, but a sizable drop in the Unemployment Rate.

The job growth figures were decidedly lower than consensus estimates:

• Expected job growth in January : +148,000 jobs
• Actual job growth in January : +36,000 jobs

The reported Unemployment Rate surprised analysts, too, but not in a bad way; falling from 9.4 percent in December to 9.0 percent last month.

This is the nation's lowest Unemployment Rate in nearly 2 years.

Stocks Rising, Bonds Sinking

Today's jobs report is rough news for Cincinnati's home buyers and rate shoppers. Shortly after the job report's release, Wall Street settled on attributing the low jobs number to "bad weather", and turned its focus to the falling Unemployment Rate figure instead.

U.S. stock markets are higher this morning, an increase that's coming at the expense of the bonds -- including mortgage-backed bonds.

Conforming mortgage rates are already +0.125% from Thursday's close. If this momentum continues, they should tack on another +0.125% before markets close for the weekend.

It's time to execute that rate lock. The Refi Boom is over, folks.

Mortgage Rates Rise As The Economy Strengthens

The government's report is an excellent example of how important jobs data can be to home affordability -- especially in a recovering economy.

The economy shed 7 million jobs between 2008 and 2009 and fewer than 1 million of those were recovered in 2010. It's a data point Wall Street watches closely because more working Americans means more consumer spending, and more consumer spending means more economic growth.

Consumers account for 70% of the U.S. economy, after all.

More workers also means more taxes paid to federal, state and local government, and, in theory, fewer loan charge-offs from banks. These, too, keep the economic engine moving forward, spurring more spending and job growth.

Cut Your Risk With A Rate Lock

If you have not yet locked a mortgage rate, consider locking one today. On the heels of today's jobs data, 30-year fixed rates will scratch at their highest levels of the year, and ARMs should follow suit.

Call your loan officer and lock your rate. Or, if you don't have a loan officer,. Include some basic details about your mortgage and I'll reply back with some ballpark rates for you. If the math works, we'll lock your rate before rates get too high.

(Blog content adapted from Bring the Blog, a blog-writing service for loan officers)