Just when it looked like the job market was improving, the Jobs Report showed that only 74,000 jobs were added in December. This was well below expectations and was the smallest increase since January 2011. However, the number of job creations for November was revised higher by 38,000, bringing November's total to 241,000.
Adding to the confusion, the Unemployment Rate fell to 6.7 percent, which is the lowest level since October 2008. However, the Labor Force Participation Rate (LFPR) fell to 62.8 percent, matching the number from October 2013 as the lowest level since the late 1970s. The LFPR measures the proportion of working-age Americans who have a job or are looking for one, and it should be moving higher in a recovery. In addition, 347,000 people left the workforce last month, though it is unclear whether these are people retiring, people leaving the labor force because they can't find a job, or a mixture of both.
What does this mean for home loan rates? Overall, the December Jobs Report was weak, which gives the Fed cover to continue its Bond purchases. Remember that the Fed had been purchasing $85 billion in Bonds and Treasuries each month to stimulate the economy and housing market. Due to strong economic data, the Fed decided at its December meeting to start tapering these purchases. Beginning this month, the Fed will now purchase $40 billion in Treasuries and $35 billion in Mortgage Bonds (the type of Bonds on which home loan rates are based).
The decision to further taper these purchases will be dependent on economic data. If more economic reports are weak like the December Jobs Report, further tapering could be delayed and this timing could have a big impact on Mortgage Bonds and home loan rates this year.
The bottom line is that home loan rates remain attractive compared to historical levels and now remains a great time to consider a home purchase or refinance. Let me know if I can answer any questions at all for you or your clients.
I would love the opportunity to help you manage your Lake of the Ozarks Mortgage Loan or refinance. Give me a call at (573) 746-7211 or send me an email at email@example.com with any questions you may have!!
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Sr. Residential Mortgage Lender
NMLS #: 493712
NMLS #: 493712
2265 Bagnell Dam Blvd, Suite B
PO Box 1449
Lake Ozark, MO 65049