This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Good Jobs Number Now Means Higher Mortgage Rates Soon

NEW YORK ( BankingMyWay) -- Political partisans are at it again, squabbling over last week's upbeat U.S. unemployment figures from the U.S. Bureau of Labor and Statistics, which pegged the jobless number at 7.8% for September and cited 114,000 new private sector jobs for the weak, but growing, U.S. economy.

Republicans say the numbers are cooked to help the president's re-election chances, and Democrats say the figures are legit and have the backing of most economists and think tanks.

While the political class keep swinging at each other, there's a different takeaway on the jobs issue for U.S. homebuyers and for homeowners looking to sell: The brighter jobs number may make buying a home more expensive, at least for the short term.

That prediction comes from Residential Finance, a Columbus, Ohio-based home loan mortgage provider. In its latest Mortgage Market Review, the firm says an improving jobs picture "will likely cause a slight, short-term uptick in mortgage interest rates".

Right now, mortgage rates remain at historic lows, with the average 30-year mortgage rate at 3.43%, according to the BankingMyWay Weekly Mortgage Rate Tracker.

Furthermore, five-year adjustable-rate mortgages and 15-year fixed mortgage rates have fallen below the 3% mark, to 2.80%, and 2.91%, respectively, according to the tracker.

Why are rising mortgage rates tied to a stronger jobs number?

By and large, any uptick in jobs helps the economy, but also comes up with a price tag attached: higher interest rates, which banks think they can afford to charge borrowers in an improving market climate. While it's too early to say mortgage rates will keep rising, RFC does say that rates will rise "in the short term," and that could affect buyers looking for a new home this month.

"Earlier this week, we correctly recommended to our customers that they lock at the current, low rates prior to the jobs announcement," says Barry Habib, chief mortgage analyst at Residential Finance. "For those who haven't yet locked in a rate - there is still time. We actually expect long-term rates will likely move lower in the future due to the continued asset purchase and the commitment to keep the Fed Funds rate low."

Habib says he needs to see signs of sustainable upward movement on the jobs front before confirming higher mortgage rates are here to stay. And despite the positive jobs number from Friday, those signs are few and far between. That said, we should know more 90 days from now.

"This significant decrease in unemployment is not likely to have an impact on the overall economy until and unless the decrease were to become a trend with continued improvements over another two-to-three months," Habib adds.

For home-hunting fence-sitters, Habib advises getting going now to ensure you'll gain from those historically-low mortgage rates. Because if the jobs number keeps improving, mortgage rates could start soaring over the next six months or so.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $95.53 2.00%
FB $117.19 -1.20%
GOOG $691.38 -0.98%
TSLA $232.80 -3.70%
YHOO $35.88 -1.80%


Chart of I:DJI
DOW 17,628.94 -121.97 -0.69%
S&P 500 2,063.37 -18.06 -0.87%
NASDAQ 4,763.2240 -54.37 -1.13%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs