In this week’s Mortgage Market Update, we’ll look at the Non-Farm Payroll report and how it affects mortgage rates. We’ll also take a look at how rates are currently trending. Be sure to check back frequently for up-to-date mortgage market data!
How does the Non-Farm Payroll report affect mortgage rates?
On Friday, the Non-Farm Payroll report came in considerably weaker than expected, reporting that there were only 134k new jobs as opposed to the estimates of 185k. The weaker figure, despite indications of a sluggish job market, actually helped stabilize mortgage rates. Even though a weak job report may sound bad, the silver lining here is that it helps prevent interest rates from rising beyond affordable limits and it also helps them from plummeting to levels that are not sustainable for the market.
Many people don’t quite understand why this single report has such a tremendous effect on the mortgage market. The non-farm payroll figure (NFP) represents the number of jobs added or lost in the economy over the last month, not including jobs relating to the farming industry. The farming industry is excluded due to the fact that it relies on a lot of seasonal hiring, which can distort employment numbers around harvest time. Non-farm payroll is an important day trading indicator because it affects all markets. The job market also has an impact on the FX, bonds, stocks, and derivatives markets.
To put it simply, when the NFP shows an increase in jobs, it means the economy is doing well. When the NFP reflects a decrease in jobs, it indicates a weaker economic climate. Naturally, there are many other reports that have an impact on the economy, but the NFP is a major influence.
Mortgage Rates Current Forecast
Currently Trending: Slightly Higher
Last week we saw rates start off strong but the deteriorate throughout the week. The release of the NFP report kept rates from worsening, helping regain stability in the market. By the end of the week, rates then began to inch up slightly.
As for the coming week, rates are likely to remain neutral, as there is no pending economic data being released today. However, interest events throughout the rest of the week may have an impact. The biggest event will be Janet Yellen’s first testimony as the new Fed Chair, followed by the 10 year Treasury auction. The most significant report of the week will be Thursday’s Retail Sales report.
A word to the wise: Be sure to stay in close contact with your mortgage lender this week if you’re considering locking in a rate. While they are remaining near historic lows, rates could change again soon with slight increases around the corner.
Remember that The Decker Group is here to help you lock in a low rate on your next Texas mortgage. Whether you’re looking for a new home in Austin, refinancing opportunities in McKinney, or investment property financing in Dallas, Kelly Decker and his team of mortgage professionals can help you find the loan program you need at a rate you can afford.