The Non-Farm Payrolls report for November may have come back stronger than anticipated, but mortgage-backed securities are still pushing down overall mortgage rates.
Positive November Report
The November job report shows good growth in employment, as the month saw 211,000 new jobs created, surpassing by over 5 percent the 200,000 new net jobs predicted by economists. The positives do not stop there, as the revised non-farm payroll reports for the two previous months show increases of more than 35,000 over what was initially reported.
This represents good news for the labor market, as it reinforces the fact that the summer slump in new job creation was a temporary anomaly, and that the nation’s economy is still on a slow but steady path of growth. Such a strong showing is now causing many analysts and economists to believe that the first raise in the Fed’s interest rates since the financial crises is near certain for the mid-December meeting. In case the increase does happen, consumer borrowing costs would go up nationwide.
Mortgage Rate Fluctuations
At present, home buyers are seeing rates on a conventional 30-year fixed-rate mortgage hovering around 4 percent, with 15-year fixed-rate even less, towards the lower end of three percent. Adjustable mortgage rates are also lower, with 5 year variable rate mortgages offering another attractive option for buyers. However, it is unlikely that rates will remain this low, especially after the December Federal Reserve meeting.
This means that now would be the best time to take advantage of the situation while rates are still at an all-time low. Despite the fact that allegedly there is no direct link between the Fed’s rates and mortgage rates, banks and other mortgage providers generally follow the Fed’s lead. There is also a significant chance that once the Fed bites the bullet and raises rates it is more than likely it will follow with further increases within a relatively short time frame,