Mixed jobs report sets stage for rate lock opportunity
Mortgage rates down after weak earnings news
The latest U.S. Labor Department jobs report showed positive employment data, posting a healthy 227,000 mark to answer a prediction of 175,000. Average hourly earnings lagged behind, however, pushing long-term treasury yields and mortgage rates down. Unemployment edged slightly higher, and coupled with the disappointing earnings, contributed to the lowered probability of a Fed interest rate hike in March, from 24% to 12%. Last December, the Fed had increased its expectation to raise rates in 2017 from two times to three. With wage growth stagnant, that expectation has unofficially been suspended, signifying a relative easing on credit availability for consumers.
10-year Treasury notes are typically a fair proxy for mortgage rates, and after absorbing the poor earnings data of only 2.5% year-to-year growth, they moved down to 2.448% from 2.502%. According to Mortgage News Daily, the 30-year fixed rate went from 4.25% to 4.23% pre- to post-report; the 15-year fixed dipped from 3.44% to 3.43%; and the 5/1 ARM moved from 3.06% to 3.03%.
However, if the new U.S. President’s plan to cut taxes and jumpstart infrastructure spending is put into action, the economy could see an acceleration of inflation, forcing the Fed’s hand to raise rates faster than anticipated. For first-time homebuyers and those looking to refinance, mortgage rates are still low and—for the time being, anyway—edging lower, signifying a great opportunity to lock in a low rate.