A surprisingly positive U.S. employment report boosted thoughts of an economic recovery, and with it, higher mortgage rates for U.S. mortgage customers.
Specifically, 15-and 30-year mortgage rates were on the upswing, as measured by BankingMyWay.com’s Weekly Mortgage Rate Tracker. Fifteen-year rates shot up to 4.46% from 4.41%, while 30-year mortgages rose to 5.01% from 4.92%.
Five-year adjustable-rate mortgages did a little muscle flexing of their own, rising to 4.26% from 4%. One- and three-year ARMs went the other way, falling to 3.98% and 4.4%, respectively.
Clearly, it was the upbeat jobs report that fueled the rise in mortgage rates. Most economists had anticipated that the U.S. labor market would shed 125,000 jobs. But when the number came in — at only 11,000 jobs lost — mortgage traders swung into action as U.S. Treasury bond rates rose by 12 basis points, thus pushing the price of mortgage-backed securities lower.
When mortgage-backed securities head lower, mortgage interest rates tend to push upward among increased demand and the opportunity for lenders to leave room for higher prices as more investors leap from bonds to stocks. It’s also useful to remember that, historically, jobs are a lagging economic indicator — the last economic barometer to rise ahead of a recovery.But there’s a nagging concern among economists that the November jobs number was a one-time wonder. How so? For starters, companies tend to hire — even at full-time levels — only seasonally at this time of year.
Once inventory pipelines are filled, and retailers have sold their last Barbie Doll or bicycle, those “seasonal” employees tend to get laid off at the beginning of the new year.