Employers added only 126,000 jobs in March where analysts expected 250,000 jobs continuing the strong numbers seen each month since November of last year. These numbers were the lowest total since December, 2013 and gave pause to predictions of a mortgage rate increase in June of this year. Now the consensus is that the Fed will delay any rate increases well beyond the June date and maybe even until the end of the year.
Mortgage rates historically improve on weak economic news and the Labor Departments announcement on Friday did not change that pattern. Rates are already near their all time lows and any drop is just gravy for potential home buyers. And speaking of home buyers, with the Spring home buying season upon us now is a great time to be in the market to buy a home.
Conventional mortgage rates are near their all-time lows as they dipped to 3.625% last week on 30 year fixed rate mortgages. Rates on 15 year home loans also improved and now sit at 2.875% for borrowers with good credit. FHA and VA government loans are even lower and at levels that expands home affordability for an ever larger number of potential home buyers.
Ready for a House?
For those who weren’t ready to buy when mortgage rates previously were at these levels shouldn’t miss this excellent home buying opportunity that is upon us once again now. Home buyers planning to enter the market this spring will find that their mortgage money goes much further with rates at current levels than their money did last year when mortgage rates were in the mid 4’s.
How long will rates remain at these levels? That question is anyone’s guess but the weak jobs report seems to indicate a softness in the labor market that the Fed will take as an indication that the jobs market is not yet on solid footing. The unemployment rate remained at 5.5% which was great news but wage growth still remains weak. The Fed has indicated in the past that it wants to see more Americans getting back to work coupled with those that are working confident enough in their jobs to increase consumer spending at a higher level over a sustained period of time.
There are positives in the economy and one is the Healthcare sector which continued to add jobs at a healthy pace. The other is the technology sector which also continues to add more workers to employer payrolls. There is also good news from the retail sector with both Wal-Mart and Target announcing that they will increase hourly wages for their workers. McDonalds also announced a pay raise for their hourly workers which in total should help workers and their incomes and the hope is that some of that increased pay might find it’s way back in to the economy. The downside in the economy is that there are still 2.6 million long term unemployed workers with many of them being older workers.
The US economy is much better today than it has been in the past but Fridays numbers show that we still have a long way to go to get back to what economists consider a “normal” market.
This article is written by Stephen Khan. Stephen is a mortgage loan officer based in the Phoenix, Arizona area. In addition to his loan officer duties he enjoys writing about mortgage related topics that help home buyers better prepare themselves to buy a home. For more information on mortgage programs and the entire loan process you can visit Stephens’s home mortgage website for more information or to contact Stephen directly.