No job growth means it’s a good time to lock in mortgage ratesby Tim Manni
When was the last time this country reported a net job change of zero? The answer is 1945. Not good.
When does the White House believe the country’s unemployment rate will fall substantially, dipping under 6 percent? The answer is 2017. Not good.
How did economists react? They said the numbers were disturbing, ominous, bad, weak. Also not good.
Sure, the 45,000 Verizon workers on strike didn’t help the August figures, but that said, both the June and July numbers were revised lower, exasperating this negative trend.
One hand (jobs) washes the other (housing)
The bottom line is that one of the most important gears in our country’s economy is moving slower and slower, taking the entire machine down with it.
The economy can certainly be thought of as an engine with many parts which all must work in unison, or a watch in which one gear turns another. When one component of the economy slows, the rest slow down along with it.
And that’s what we’re dealing with now, and that’s what we’ve been dealing with for years.
Housing and jobs–while technically two different markets–are two links in a long chain. These two economic sectors go hand in hand with one another.
Today’s employment report hurts housing in two big ways
ONE: Unemployment has been one of the single largest reasons homeowners with good credit and solid payment histories have joined the ranks of the delinquent. Unemployment has robbed many from chance at refinancing or modifying their mortgages.
Many homeowners who experience a loss of income begin to prioritize certain monthly payments, opting to keep their credit cards in good standing over their mortgage payments.
TWO: Homes (mortgages) are just like any other big-ticket item that’s for sale…No matter what it is, people without jobs or a reduced income aren’t buying.
Here’s the good news
But the dismal job numbers aren’t bad news to everyone.
Mortgage shoppers are one group likely to benefit from today’s job report. Mortgage rates, especially recently, have been closely tied to the economy, and with every negative report comes at least some downward pressure on rates. If nothing else, today’s employment report keeps mortgage rates from moving upward more than they otherwise would have.
It’s time to lock in your rate
But as Green explains, this downward pressure may not last long, so go ahead and lock in your rate.
“Pricing is now eroding. And, because of Labor Day, volume is light, so any worsening this afternoon will be magnified. There’s safety in locking; risk in floating. It’s a good day to lock.”