The July jobs report will be released tomorrow. Do you have a rate lock strategy in place or willing to miss an opportunity to lock in a crazy low mortgage rate? At 8:30 AM ET Friday, the Bureau of Labor Statistics will release the July 2011 Non-Farm Payrolls report. Mark it in your calendar. If you’ve been watching mortgage rates fall to new all-time lows this week in response to the debt ceiling debate, and fear a mortgage rate reversal, Friday could be the day.
The monthly Non-Farm Payrolls data can swing a big stick in mortgage markets. How big? I have seen mortgage interest rate change as much as .5% in once day, but that is very rare. Most large rate movements are .25% to .375%…..but that can still make a big difference in your payment and cost of the loan.
More commonly called “the jobs report“, Non-Farm Payrolls details the U.S. workforce, providing sector-by-sector analysis of workforce, as well as the national Unemployment Rate.
The jobs report affects mortgage rates because of how important jobs are to the U.S. economy.
When there are more working Americans:
- There’s more consumer spending, a boost to businesses
- There’s more tax collection, a boost to governments
- There’s more personal savings, a boost to households
This behavior reflects job growth and considered good economic news, which then tends to drive up equities, or the the stock market. Traders and investors will then sell off bonds (debts) and buy stocks. When bonds sell off, bond prices drop and this causes mortgage rates to rise.
In July, analysts anticipate 85,000 new jobs created. This would be a 4-fold increase from June’s 18,000 figure.
The Unemployment Rate is expected to remain unchanged at 9.2%. If the number of jobs is more than 85,000, look for mortgage rates to rise quickly, if less, i don’t expect to see mortgage rates drop any more than they have already.
Mortgage rates are near all-time lows again this morning. By Friday, they could rise. The safe move is to lock your rate today. Rates may fall when the jobs report is released, but there’s much more room for rates to rise.