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Mortgage Rates Roll-Up On Jobs Growth, Unemployment Data

By Dan Green

The Bureau of Labor Statistics reports another month of workforce gains and another drop in the national unemployment rate; an update on today’s mortgage rates and a look at the 5-day trend for interest rates; and, the Pending Home Sales Index from the National Association of REALTORS® points to a slowdown in home sales through the summer months.

Jobs Data Affecting U.S. Mortgage Rates

Non-Farm Payrolls shows 92 months of consecutive growth - Growella
Non-Farm Payrolls shows 92 months of consecutive growth

The jobs market continues to improve.

According to the U.S. Bureau of Labor Statistics, employers added a net 233,000 new jobs to payroll last month, marking the 92nd month of consecutive gains, a streak that dates back to October 2010.

The workforce has added more than 18.2 million jobs since that time.

The government also reports a drop in the national Unemployment Rate to 3.8 percent, which is the lowest rate in eighteen years.

Non-Farm Payrolls data affects U.S. mortgage rates. As jobs markets improve, inflationary pressures surface and inflation leads to higher rates.

It also leads to Fed action.

Next week, the Federal Reserve will meet for its fourth scheduled meeting of the year. The group is expected to raise its benchmark Fed Funds Rate by 25 basis points, or 0.25 percentage points, but that does not mean that mortgage rates will rise, necessarily.

The Fed does not set mortgage rates. Wall Street does. However, the group’s policies and rhetoric can influence the direction in which mortgage rates go.

When the Fed singles out inflation in its commentary, mortgage rates often rise. And, this is a risk today’s mortgage rate shoppers face.

It’s a good day to get an updated rate quote on your loan. The longer you wait, the more your quote can change.

Today’s Mortgage Rates & Interest Rate Trends

Mortgage rates and 5-day chart - Growella
Mortgage rates and 5-day chart

Mortgage rates are higher today.

After a nine-day win streak that took 30-year mortgage rates to their lowest levels in seven weeks, pricing is now worsening for home buyers and refinancing households. Stronger-than-expected jobs data and a pull-back on the Italeave story are primary drivers.

Here’s a look at today’s mortgage action:

The actual rate quote you get from a lender will depend on more than a dozen factors including your loan size, your credit score, and the state in which you live.

Your choice of loan programs matters, too, so don’t expect to get the same rate quote as your neighbor, co-worker, or family friend. In general, USDA loans and VA mortgages come with the lowest rates; conforming loans come with the highest (excepting for the HomeReady loan)

Lastly, comparison shop your mortgage to make sure you get today’s best mortgage rate. It’s proven that the lowest mortgage rates go to consumers who shop around.

Get Today’s Mortgage Rates

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Home Sales Still Strong Into Summer

Pending Home Sales Index hit by low inventory - Growella
Pending Home Sales Index hit by low inventory

Fewer homes for sale went into contract in April, but it’s not bad news for housing.

Each month, the National Association of REALTORS® publishes its Pending Home Sales Index, a measurement of MLS-listed homes going into contract.

A home is “pending” after a contract is written for it, but before the closing has occured.

Historically, 80 percent of homes under contract reach a successful closing, so the Pending Home Sales Index functions as a reliable, forward-looking indicator for U.S. existing home sales.

The index slipped just over one percent in April to reach a value of 106.4. It’s the lowest reading since January and represents a decline from the year-ago figure.

Housing isn’t suffering or slumping, though.

Values over 100 are considered “excellent” because of how the NAR calculates the Pending Home Sales Index; contracts are counted and normalized against the values from 2001, which is the year the index launched.

A value of 100 equates to the activity volume from that founding year, and 2001 is considered to be a strong year for housing with more than 5 million homes sold during the calendar year.

So, the most recent Pending Home Sales Index reading, although down from months prior, suggests that the spring and summers housing markets are strong, and the home values will climb nationwide.

If your plans include buying a home in 2018 or early-2019, you may be buying into a rising market for homes.

Written by Dan Green

Dan Green is a mortgage lending expert and the founder of Growella. Prior to Growella, Dan was a six-time, top-producing loan officer; and, ranked repeatedly among the top 1% of loan officers nationwide. Dan's home buying expertise has been in print and on TV with The Wall Street Journal, NPR, Forbes, CNBC, and others.

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