Mortgage borrowers who want rates to stay low have dodged another bullet with the release of the July jobs report.
The labor market has been growing at a decent pace but that's not good enough in the eyes of skeptical investors.
Normally, job growth leads to higher rates …
The economy added 209,000 jobs in July, the Labor Department said Friday. That's less than the 230,000 jobs that economists had expected. Still the latest report marks the six straight month of growth of more than 200,000 per month, a sign that job growth is stable, at the very least.
Solid job growth normally leads to higher mortgage rates as investors gain confidence and pull out of safer investments, such as Treasury and mortgage bonds, to bet on more profitable investments.
… but rates fell this time
But today's reports actually helped push mortgage rates down slightly since this morning, luckily for borrowers seeking low mortgage rates today.
"The bonds seem to be rallying," says Michael Becker, branch manager at Sierra Pacific Mortgage in White Marsh, Maryland. "The 10-year (Treasury yield) is back to 2.5 percent. The jobs report kind of relieved the market."
What will it take for rates to rise?
In the long run, if job growth continues to strengthen, rates will eventually rise, Becker says. But it will take more than just more than the addition of jobs. These will have to be higher-paying, full-time jobs to really translate into strong economic growth.
"Everybody trades on the headline number the second it comes out but then they look at the details of the report and see it's not as great," he says.
Can't even go to the dollar store with that raise
Many of the jobs being added are part-time, low-wage paying jobs. Yes, average hourly wages increased in July by a whopping 1 cent. That means the average worker who put in 40 hours a week earned about 40 cents more per week in July. I'm having trouble coming up with items you can buy with that kind of raise. You can't buy a bottle of water, a soda or a pack of gum with that. Any suggestions?
Oh, and if you are thinking of getting a mortgage soon, today would probably be a good time to lock your rate.
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