The November Jobs report came in at 120,000 new jobs, 140,000 in the private sector offsetting losses of government jobs. This is right in-line with expectations. There were upward revisions to the two prior months readings adding another 72,000.
Hourly earnings grew by just .1% compared to the expected .2% and that suggests no threat of wage based inflation and that is a good thing for bonds and interest rates offered on home loans.
The big "huh?" involved in this mornings report was a completely unexpected sharp drop in the unemployment figure from 9% down to 8.6%. However, that may or may not be a "real" number in that people who in essence give up on finding a job are not counted in the unemployment rate. i.e.- the 8.6% are people who are actively seeking work and cannot find it. 315,000 were removed from the "workforce" and therefore aren't considered when determining that rate of unemployment.
One bit that is currently flying under the radar though is the "Labor Force Participation Rate." This is calculated based on people over the age of 16, not in the military, qualified for work against the total number of people living in the country. Basically it measures how many people are living here are actually participating in the labor force. This fell to 64.0 down from 64.2 and is hoovering at 30 year lows. If this number doesn't come up north of about 66 or so, it will be difficult for our economy to grow fast enough to lower the budget deficit. We have to have people "participating" in order for our debt bill to be paid. It's that simple and this is a big deal, not sure why it isn't receiving the attention it deserves but we need to keep an eye on this as it could have very serious long term consequences if it's not corrected soon.
I expect to see home loan rates stay fairly flat for near future in spite of the jobs report and drop in unemployment. I think with inflation tame, the uncertainty in Europe, along with the rumors of QE3 (the Fed buying more mortgage bonds), the price for mortgage bonds should remained propped up keeping rates in the range we've been seeing for the last few weeks. HOWEVER, I also don't see a situation that would result in rates moving substantially lower as they are already holding at or around all time lows and though inflation isn't a problem yet, it is slightly elevated and as it continues to creep higher, it will prevent any further drop in rates and eventually the increases will start. In other words, now is the time, waiting for lower rates is a pointless and potentially foolish and costly game to play.
If you are in the market to refinance or purchase a new home and the only reason you're still on the sidelines is because you're taking the "wait and see" approach for mortgage rates, you need to get in the game now. If you are on the sidelines for other reasons, then now is the time to have a detailed consultation with me to find out what steps do we need to take over the next few weeks/months in order to eliminate those reasons so that you can get in the game before the opportunity passes us by. In other words, regardless of what is keeping you out of the conversation, it's time to take action and get on the phone with me. Whether we close a loan now or not is almost irrelevant because you will walk away from the conversation better equipped to position yourself in such a way that you greatly improve your overall financial health for you and your family. It's that simple! Call or email today and lets get the conversation started even if you aren't sure what direction we need to move in. Remember, doing nothing is an action in and of itself and the best action to take is rarely the "do nothing" approach. Talk is free, advice is free, the only thing you lose is a little time and the potential gains are tremendous.
Looking forward to our conversation!
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