Arguably the most important economic data released each month is the Employment Situation Report that tracks non-farm jobs and the overall unemployment rate. A look at the last two reports and the reaction of mortgage rates provides some insight as to what might happen on Friday when the December report is released.
In October mortgage interest rates had been on a downward slope for 5 months straight. Early November say the lowest rates in Freddie Mac recorded history when the 30-year fixed loan hit 4.17%.
Then came the October employment report released on Nov 5 which showed a slight increase of 159,000 jobs in the private sector. This smidgeon of positive economic news was heralded as a turnaround and the stock market picked up steam and mortgage rates took off on a 7 week streak upward from 4.17% to 4.86% by the end of the year.
But what about the November employment report? The November data released December 3rd was expected to show job increases of 110,000 but instead showed a plus 39,000. Worse, the unemployment figure that had held steady at 9.6% for months suddenly jumped to 9.8%. This should have taken the wind out of the optimist sales, but no, the stock market had its best December in 19 years, and mortgage rates continued on their merry upward journey.
That brings us to this week’s report. If history is a guide, good news on employment will not be good news for mortgage rates. Bad news for employment may not be good news for mortgage rates either. Weekly unemployment applications are down indicating that the probability for good news on Friday is high. Lock in your mortgage rates before Friday.
