March 7th Moorings

Hello and welcome to this week’s edition of Moorings, a source for local and national news on the mortgage and real estate industries. Rates have again remained unchanged, hovering at approximately 4.875 to 5.125%, depending on origination fees and credit scores. In national economic news, the Jobs Report last week was definitely a positive. The Jobs Report showed that 192,000 jobs were created in February, with a gain of 222,000 jobs in the private sector. As expected, there were also upward revisions to the prior two months, which added 58,000 more jobs than were previously reported: another positive! What’s more, unemployment lines were a little shorter last month as the Unemployment Rate fell to 8.9%, down from the prior month’s reading of 9.0%. This represents the best reading on the Unemployment Rate in nearly two years, not great BUT the best bad report in two years!

So what does all of this mean for the housing market and home loan rates? In terms of the housing market, the continued improving trend for the job market is good news, as people tend to avoid purchases when they’re concerned about losing their job or not being able to find one. In terms of rates, February’s Jobs Report suggests that the Fed’s Quantitative Easing 2 Program (or QE2, which is their plan to purchase $600 Billion in Treasuries through mid-2011) will continue through the end of June as originally planned. This is because the report was good, but not a blowout reading… and Fed Chairman Ben Bernanke said earlier last week that we need to see a long stretch of sustained job growth in order to remove the present stimulus actions. As I have said before in this column, as the governments buying of mortgage backed securities continues rates have remained at their current lows. When the government ends this program, hopefully in a gradual manner, rates will likely rise as the amount of mortgage investors goes back primarily into the private sector. Obviously this is our hope for long term stability, which is probably just wishful thinking, as a quick and sudden decision to end the government’s buying would cause rates to sky-rocket for a short time in a knee jerk reaction. While it may be short-lived, such an action is never what we want to see.

So what does all of this information mean to the consumer? Well home loan rates are still very attractive and barring any major changes in US economic policy we hope to see them remain fairly level until summer. This is never an assurance though, as changes in other countries politics and economics can also have a drastic effect on our own economy, as we have seen with gas prices and the ongoing conflicts in the middle-east currently. It is NEVER a good idea to sit on the fence when you know you are ready to refinance or purchase. Call your mortgage provider and start the paperwork so you can be sure to not get caught in a changing market with volatile rates. Until next week Be Blessed and Numbers 6:24-26 be on you.