Moorings Column 10-08-12

Hello and welcome to this week’s edition of Moorings, your source where local and national mortgage and real estate news meet. Interest rates have risen slightly from last week to an average of 3.625% for a conventional thirty year fixed. FHA rates have remained incredibly low though, staying at 3.25% for a thirty year fixed loan. Obtaining a loan like this does still require 3.5% down payment and monthly mortgage insurance, but your monthly principal and interest payment on a $200,000 loan would be only $870. That is really quite amazing. Add in your monthly taxes, insurance and mortgage insurance and your estimated total monthly payment would be approximately $1,300.  That is not at all a bad payment for a $200,000 mortgage. As always though, keep in mind that approval is not automatic and is subject to adequate credit scores, income, employment history and other factors.


In major economic news, last week, the Jobs Report for September was released, but the numbers may not be as clear as they seem. Read on for details and what they mean for home loan rates. The Labor Department’s Jobs Report showed that 114,000 new jobs were created in September, with 104,000 private sector job gains and 10,000 government job gains. While this number was lower than expectations, the job numbers for July and August were revised much higher. But perhaps the biggest news in the report is that the unemployment rate came in at 7.8%, falling by a whopping 0.3% from Augusts 8.1% reading. This represents the lowest unemployment rate since January 2009.


On balance, Septembers Jobs Report confirms that our economy is producing 125,000 to 140,000 jobs per month. While that may sound good, those numbers are not high enough to keep up with immigration and population growth. The ongoing weakness in the labor market is one of the major reasons why the Fed announced another round of Bond buying (known as Quantitative Easing or QE3) on September 13, saying they will provide this stimulus to our economy until the labor market is well into recovery.


So what does all of this mean for home loan rates? Another reason the Fed enacted QE3and they are buying such large amounts of Mortgage Bonds each month is to keep home loan rates (which are tied to Mortgage Bonds) near record lows. The Fed hopes this will help strengthen our housing market and economy overall. However, as the labor market and economy start to improve and if inflation heats up, Bonds could face some selling pressure which could impact home loan rates negatively as a result. The bottom line is that now is a great time to consider a home purchase or refinance, as home loan rates remain near historic lows! Well that’s all for this week and until next week, Be Blessed and Numbers 6:24-26 be on you.