Today's jobs report for June has crushed hopes of lower mortgage rates and could actually make rates climb higher.
The U.S. economy added 195,000 jobs in June, more than the 160,000 economists had expected. And the numbers for the two previous months were revised upward from 149,000 to 199,000 in April, and from 175,000 to 195,000 in May.
The unemployment rate stayed at 7.6 percent with 11.8 million people unemployed. Still, the latest reports show steady job growth, which usually isn't good for mortgage rates because it makes investors confident about the economy.
The bad news following the good news
But what makes this report potentially bad for mortgage rates is what investors will read between the lines. Last month, rates spiked when the Federal Reserve said it could trim its $85-billion-per-month bond-purchasing program this year if employment continued to improve. Many investors will interpret this report as the latest sign that the economy is healthy enough to walk on its own without the Fed holding its hand.
You and I may disagree with that assessment, but that doesn't matter for mortgage rates.
See those bond yields jump
Movements in mortgage bonds yields and the 10-year Treasury note normally are an indication of where mortgage rates are headed. Since the jobs report was released this morning, Freddie Mac's mortgage yields jumped to 4.21 percent from 3.88 percent on Wednesday, before the holiday. The yield on the 10-year note spiked to 2.71 percent from 2.47 percent.
If you are planning to get a mortgage or refinance in coming days, quit wishing for lower rates and just hope they don't climb much higher by the time you lock.
And here is a fun fact in case you think the 4.5 percent you are getting for a 30-year fixed loan is too high: Around this time of the year in 2001, the rate on a 30-year fixed mortgage was 7.2 percent.
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