April 9th Moorings Column

Hello and welcome to this week’s edition of Moorings, your source where local and national mortgage and real estate news meet. I hope everyone had a wonderful Easter holiday and enjoyed some quality time with friends and family. To start off with this week, let’s take a look at interest rates which have again risen slightly back to 4.25% for a thirty year fixed rate loan. This is still a great deal though with home prices at all-time lows right along with the rates. To put this in perspective, a two hundred thousand dollar loan at 4% interest for thirty years would have a principal and interest payment of $954. Change that to 4.25% interest rate and the payment only goes up by $29, which is hardly worth sitting on the fence for. If you are looking at purchasing a home and have found the one you want then lock in now. Waiting around for rates to lower by an eighth of a percent is just not worth it. Remember only one of two things can happen…the rate will go down and you save a few dollars, or it may go up and cost you even more.  When rates are already at some of the lowest they have EVER been…I think the latter is the more likely of the two situations.


In major economic news, last week’s Jobs Report for March showed that 120,0 00 jobs were created, with 121,000 private gains offsetting modest government jobs losses. This was an utter disappointment, as expectations were for something north of 200,000 job creations. The unemployment rate declined to 8.2%. While any decline in unemployment is good news, the figure does need to be taken with a grain of salt – especially in light of the significant headline jobs creation miss. The reason why: the Labor Force Participation Rate (LFPR), which removes some of the guesstimating and adjustments of the unemployment rate. That number (currently at a 30-year low) is a concern because if the LFPR continues to decline, it means we are seeing a smaller ratio of people working against the overall population. This will be another headwind to our already debt-laden government.


While the Jobs Report was disappointing news for our economic recovery, Bonds (which thrive on weak economic news) improved on the news, including Mortgage Bonds, to which home loan rates are tied. And of course, the ugly headline jobs creation reading also renewed the talk of another round of Bond buying (Quantitative Easing or QE3)even though the minutes from the March 13th Fed Meeting suggested there would be no QE3 unless the economy falters. Well that’s all for this week and until next week be Blessed and Numbers 6:24-26 be on you.