July 11, 2012
Last week in review (July 2-6, 2012)
The Labor Department’s Jobs Report for June was not promising. Read on for details and what it means for home loan rates.
Last Friday, the Bureau of Labor Statistics reported just 80,000 jobs created in June, with 84,000 private job gains offsetting 4,000 government job losses. Revisions to previously reported April and May numbers resulted in an additional 1,000 jobs lost. For the first quarter of 2012, the US economy added an average of 225,000 jobs. But in the second quarter, the economy averaged just 75,000 job creations.
In addition, the Unemployment Rate held steady at 8.2% and the Labor Force Participation Rate (LFPR) was unchanged at 63.8, remaining at a 31-year low. This is a real headwind to the US economy as we need more people “participating” or working relative to those who are not. And that is simply not going to happen as long as the US economy continues to struggle with 2% GDP growth.
The real question to ask is: Was the report negative enough to guarantee another round of bond buying, known as Quantitative Easing or QE3? It’s important to note that additional hints of QE3 could initially push stock prices higher, shifting cash out of the bond trade and hurting home loan rates (which are tied to mortgage bonds) in the process. This is an important news story to watch in the weeks ahead.
The bottom line is that home loan rates remain near historic lows and now continues to be a great time to purchase or refinance a home.
As you can see in the chart below, the ISM Index (a national manufacturing index based on a survey of purchasing executives at roughly 300 industrial companies) came in at 49.7, showing its first contraction since July 2009 (readings below 50 signal contraction). Weak economic reports are one of the reasons bonds and home loan rates continue to reach record best levels.
Table Source: Mortgage Success Source
In the news this week (July 9-13, 2012)
Table Source: Mortgage Success Source
Mitch Canada | Sr. Mortgage Loan Officer
NMLS ID: 118960
866.861.0702 | visit my website
Mortgage Success Source, LLC is the copyright owner or licensee of the content and/or information in this email, unless otherwise indicated. Mortgage Success Source, LLC does not grant to you a license to any content, features or materials in this email. You may not distribute, download, or save a copy of any of the content or screens except as otherwise provided in our Terms and Conditions of Membership, for any purpose.
Any opinions expressed herein are that of Mortgage Success Source only. Mortgage Success Source is not owned, operated or controlled by Bank of America, N.A. or its parent or affiliates. This publication is provided for your general information only and the observations and statements expressed herein do not necessarily represent the views of Bank of America, N.A. or its affiliates. Bank of America and Mortgage Success Source assume no liability for loss or damage as a result of your reliance on information in this publication. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, no representation is made as to its accuracy or completeness and as a result, there is no guarantee it is not without errors. THIS INFORMATION IS INTENDED FOR MORTGAGE, REAL ESTATE AND/OR BUILDER PROFESSIONAL USE ONLY AND IS NOT AUTHORIZED FOR CONSUMER OR PUBLIC DISTRIBUTION.
Bank of America, N.A., Member FDIC Equal Housing Lender © 2012 Bank of America Corporation. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice.