In June, for the first time since December 2009, the U.S. workforce shrank. Sort of.

Jobs AND Unemployment Rate Down

According to the Bureau of Labor Statistics, the economy shed 125,000 jobs last month, and the Unemployment Rate dropped to 9.5 percent.

And, no -- those figures aren't contradictory.

Because the Unemployment Rate measures the number of people looking for work as compared to the total workforce size, as people stop "looking", it follows that the Unemployment Rate falls, too.

Fewer people are looking for jobs.

So Far, 857,000 New Jobs This Year

At first glance, the jobs report looks weak but a deeper look shows something different.

Excluding the 225,000 government Census workers that recently left the workforce, the total number of employed persons actually grew by 83,000 in June. That’s 50,000 more working Americans as compared to May.

Plus, since the start of the year, the U.S. workforce has grown by 857,000.

Why Jobs Matter To Mortgage Rates

Jobs growth is closely tied to economic growth.  This is because working Americans have more disposable income which, in turn, stokes consumer spending, the biggest part of the U.S. economy by a long-shot.

Job growth is better for the economy than job loss.

So, as consumer spending grows and lifts the economy, Wall Street mentality tends to shift from "safety of principal" (i.e. bond markets) toward "return on principal" (i.e. stock markets).  A move like this is bad for rate shoppers in Cincinnati because falling bond demand is linked to higher mortgage rates.

Take Advantage. The Market Is Missing The Signals.

A strong jobs report should cause conforming mortgage rates to rise. And, if we peel back the layers, June's jobs report was strong.  But Wall Street doesn't see it that way.

Wall Street is focusing on the headline number -- 125,000 jobs lost -- and ignoring the bigger picture. Don't let that be your loss, though.  For now, 30-year fixed mortgage rates are below the magical 4.500 percent marker for which so many homeowners waited to refinance.

5-year ARMs are available under 3 percent.  It's unfathomable.

Take advantage of the lowest mortgage rates in history.

ARMs Below 3 Percent And Other Amazing Rates

Whether you live in Cincinnati, Chicago, or anywhere else, mortgage rates are amazingly low right now. If I wasn't knee-deep in mortgages each day of my life, I don't think I'd believe the rates were "real", actually.  It's almost ridiculous.

No matter what you think about your mortgage qualifications -- too little equity, too little income, too big of a loan size -- take 5 minutes out of your day to call your loan officer. Find out whether you qualify for a mortgage at today's rates.  Sure, rates may fall lower, but, then again, they might not.

Call my office at 513-443-2020 to get your rate, or .

On the first Friday of each month, the Bureau of Labor Statistics releases its Non-Farm Payrolls data from the month prior.  It's a mortgage market mover and today is proving the point.

How Jobs Data Changes Rates

The Non-Farm Payrolls data is more commonly called "the jobs report" and it's a major factor in making mortgage rates and, hence, monthly payments for homeowners in Cincinnati and everywhere else.

Especially at this point in history.

With the recession officially over and growth returning to the U.S. economy, the recovery's next big frontier is jobs. Because mortgage rates have been partially beat down from weak jobs data, it follows that on strong jobs data, rates should rise.

Jobs Growth Is Trickle-Up For Housing

The jobs report is a keystone with respect to home affordability figures. Here's why:

1. As the number of working Americans grows, so should consumer spending
2. As consumer spending increases, so should a return to risk-taking on Wall Street
3. As risk-taking returns to Wall Street, bond markets should start to lose

Mortgage rates, as a result, tend to rise when more Americans enter the workforce versus leaving it.

Furthermore, job growth gives renters confidence to buy their first home, and existing homeowners confidence to up-size.  With more home buyers in a given market, there's going to more competition for homes.  Higher home prices typically follow.

Job growth can be trickle-up for housing.

May 2010 Jobs Report Is Great For Rates

But what about when the jobs report is "bad"?  Like today.

According to the government, 431,000 jobs were created in May, but of those new jobs, 95.4% represented temporary staffing for the 2010 Census.  That's staggering -- even as the Unemployment Rate dipped to 9.7 percent.

The number of private-sector jobs created last month fell well short of expectations and Wall Street is voting with its dollars right now.  Stock markets are off, bond markets are up, and mortgage rates are lower versus yesterday's close.

Call it a boost for home affordability.  It's a good day to lock a mortgage rate.

Use The Jobs Report To Your Advantage

If you haven't given a loan application to your loan officer, do it today.  And think about locking, too.  Yes, yes, yes... it's important to shop around.  But take too long to shop and you risk rates moving higher.

It happens all the time. And it's an awful feeling to know you missed the "lowest rate" because you got greedy.

Start with an application-by-phone.  It's a 4-minute process. To give one, call my office at 513-443-2020 or . And be sure to give applications to other loan officers, too. You want more than one person looking at this for you.

Then -- when you're ready -- lock.  Just don't wait too long.

(This post adapted from Bring the Blog, a daily blog-writing service for loan officers and real estate agents)

Need a mortgage rate prediction? I am a regular participant in the Bankrate.com Mortgage Rate Trend survey and this week's survey may help you.

The Bankrate.com survey is for conventional, conforming mortgages only. It does not apply to FHA mortgages or jumbo mortgages. Nor is the survey specific for Cincinnati or Chicago mortgage rates.

for a real-time rate quote.

Here's the group's mortgage rates predictions:

• 43% predict mortgage rates will increase
• 14% predict mortgage rates will decrease
• 43% predict mortgage rates will remain unchanged

I expect mortgage rates to decrease.

My advice not be appropriate for your individual situation and I'm not always right. Ultimately, you may find your time better spent watching people get punched in the face right before eating a sandwich than reading my analysis.

Either way, here's what I told Bankrate.com:

"Jobs data drags down rates."

On the first Friday of every month, at 8:30 AM ET, the U.S. government releases the Non-Farm Payrolls report, except most people don't call it that.  They call it "the jobs report".  Tomorrow is the first Friday of the month.

The jobs report has always been influential with respect to mortgage rates but, lately, it's of larger import.  This is because Wall Street believes that jobs growth is the way forward for the economy.  No jobs, no growth.

The jobs-to-growth connection is pretty straight-forward. Versus an unemployed person, an employed person is:

1. More likely to spend free cash
2. More likely to feel confident about his economic future
3. More likely to make on-time mortgage payments

Each of these points promotes economic growth and stock markets tend to improve when jobs data is strong.  This happens at the expense of bonds, of course, and mortgage rates rise.

But there's another angle, too.

Because jobs are a lagging economic indicator, net job gains imply that U.S. businesses are feeling better about their prospects for 2010 and 2011.  This, too, excites stock markets, creating even more bond market damage. That's why a blowout job number would be awful for mortgage rates Friday.

Thankfully, it won't happen.

Even though markets are officially calling for 13,000 new jobs, whispers numbers are moving the target even higher.  Therefore, the number of net new jobs would have to exceed the original estimate and then some, plus, prior revisions would have to revise higher, too.

Reviewing recent trading patterns -- over the next week -- mortgage rates have more room to fall than to rise.  Longer-term, this isn't the case, but for now, you can float safely.

That said, locking mortgages is a game of timing and to play, you'll want some help.

If you don't have a loan officer you can call up for advice, know that you can always call me. Or, , whichever is easier. I handle all of my own email and I would happy to get your mortgage rate lock ready for you. The key is to make a plan that works, pick a rate that fits the plan, then wait to execute.

It's what I do best.  Plus, my bank has good, low mortgage rates. Just ask me about it.

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.

The August jobs report was released this morning.

Unemployment rose to 9.7 percent nationwide as employers shed another 216,000 jobs.  The news may not be as bad as it first seems.

Despite ongoing job losses and a rising Unemployment Rate, the jobs report reinforces the notion that the recession may be ending soon, if it hasn't already.

This is because Wall Street tends to treat employment data as a lagging economic indicator.

1. Businesses are slow to hire new workers when the economy is improving
2. Businesses are slow to fire existing workers when the economy is worsening

Because of this pattern, the monthly jobs report rarely reflects the "right now" of the U.S. economy and Wall Street knows it.  More often, the report reflects the economy as it existed several months ago and, based on data, the economy appears to have broken out of its funk in April or May.

Consider these 2 examples of employment as a lagging indicator:

1. Job losses peaked in January 2009 -- 4 months after the September 2008 Financial Crisis
2. Job losses peaked in October 2001, 1 month before the 2001 recession ended.  Jobs finally turned positive in October 2002 -- 12 months into the subsequent recovery

In other words, jobs data doesn't so much tell us about today as it tells us about yesterday.  It's why mortgage rate are improving this morning. Wall Street expected the jobs data to be a little bit stronger than what it was.

All the talk of rising home values and consumer confidence levels may have left investors too optimistic about jobs and consumer spending.  Today, they're shifting expectations and spelling good news for home buyers and rate shoppers.

On a lightly-traded day because of the holiday weekend, mortgage rates are improving.

This 90-second video discusses gives some rate-locking strategies in advance of this Friday's jobs report. With the housing market mending and Wall Street cutting the week short because of Labor Day, national employment statistics are the new economic bellweather.

The August jobs report is due Friday, September 4. In advance of the data, register and lock a mortgage rate for purchase or refinance by calling or .