The U.S. economy gained fewer jobs in August than expected, a sign that it may be too early for the Federal Reserve to cut the stimulus program that has helped keep a lid on mortgage rates.
The economy added 169,000 jobs in August, according to the monthly employment report released by the Labor Department. That's slightly fewer jobs than the 180,000 economists had expected. Job growth in July and June also was weaker than previously reported. The July report was revised down from 162,000 to 104,000, and the June report was revised from 188,000 to 172,000.
The unemployment rate dipped to 7.3 percent but only because many people dropped out of the workforce.
Yeah, yeah, but what does this mean for me?
While this report isn't great news for the economy, it may be just what mortgage borrowers needed to hold mortgage rates in place for now.
The Federal Reserve is closely watching the labor market as it prepares for a decision on when to trim its $85 billion per month bond-buying program. Mortgage rates likely will jump once the Fed scales back the purchases of mortgages and Treasury bonds. The Fed meets on Sept. 17-18, and investors worry that the Fed will announce the tapering of the program then.
Since the employment report was released this morning, the yield on the 10-year Treasury note fell to 2.88 percent after it almost reached 3 percent on Thursday. Mortgage rates tend to follow the same direction as Treasury and mortgage bond yields.
But borrowers shouldn't sit there and wait for mortgage rates to fall. Take advantage of the opportunity you have now, and lock in a rate as soon as you can.
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