Mortgage rates up after encouraging jobs report
Positive employment data builds case for future Fed hikes
The Labor Department announced on Friday that average hourly earnings increased by .4% in December, which was higher than economists’ estimates. Mortgage rates, which had seen a slow but steady decline from two-year highs in mid-December, moved higher in reaction to the promising economic data, with the 30-year fixed rate ticking up 3 basis points.
Earnings are also up 2.9% year-to-year, the largest gain since mid-2009. Though nonfarm payrolls fell short of expectations last month (156,000 new jobs added; 172,000 projected), the improvement in earnings is just what the Federal Reserve Open Markets Committee will be looking for as they move forward with plans to increase interest rates three times this year. The bond market moved as expected, with the yield on the U.S. 10-year note moving higher to 2.42% after reaching 2.30% earlier this week. Other headline numbers were softer than expected, as the unemployment rate edged slightly forward to 4.7% from 4.6% last month.
Given the recent move lower in interest rates and the positive wage data released this morning, it’s a good idea to consider locking in a low rate today.