Jobs Gain, Mortgage Rates Lose

It’s the first Friday of the month and therefore the release of the Non-Farm Payrolls data from the month prior.

Often referenced as the “jobs report,” it is one of the strongest factors in setting mortgage rates.

Bottom line:  The 2009 recession is over.  That’s a fact.  Wikipedia says so.  The concern is whether there is a new recession starting.

The support is mixed:

1. Job growth has been slow, but planned layoffs touch a 10-year low
2. Consumer confidence is down, but beating expectations
3. Consumer spending is weak, but not declining

For every stat that says we’re not moving into another recession, there are 10 talking heads on CNN driving up ratings chirping about a “double-dip recession.”

The economy is driven more by employment than any other factor.  More workers means more paychecks, more taxes paid, more consumer spending, and that big one…consumer confidence.  Consumer confidences drives big ticket items which in turn creates more jobs and pushes the entire cycle forward.

Today’s jobs report shows that 54k jobs were lost, but 114k were the temporary Census workers being laid off.  Private-sector, the important sector, added 67k jobs.  Additionally, June and July were revised upwards by a total of 123k.  In total, this is good news.

The results were fair, nowhere near as much growth as we need just to keep up with new workers entering the workforce, but nowhere near the dismal numbers that we’ve seen for quite some time.

Jobs power economies.  Strong economies mean businesses borrow money.  When businesses borrow, they are fighting for the same dollars that have been powering these historically low mortgage rates.  Wall Street is happy today that things weren’t worse, that’s caused mortgage rates to push higher today.  If the broader economic picture turns towards anything other than the worst-case projections, home values and mortgage rates should continue to rise.

Home affordability is in the cross-hairs.  A slight tick in home values and just a 0.25% jump in mortgage rates can dramatically change your monthly housing payment.