Mortgage Trends This Week: Dec. 7


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’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.

Another reason is the $787 billion stimulus package. The White House says the stimulus package should be credited for a big part of the November rebound in employment. While that is indeed good news, the stimulus money can’t last forever, and subsequent calls for a second stimulus might indicate that the economy still has a long way to go before it reaches full health.

By and large, economists estimate that it takes a growth rate of 125,000 jobs each month to get the labor market back to normal and even economists with the rosiest of glasses aren’t predicting that event. But Morgan Stanley did release a jobs report last week that forecast an increase in American jobs in early 2010.

If that transpires, then mortgage rates would likely shoot up, maybe even to 6% by next spring. If the next one or two job numbers come in with more jobs lost, then all bets are off.

The moral of the story? Pay attention to the first week of every month when the U.S. Labor Department releases its employment numbers. To play it safe, jump in now and lock down a low mortgage rate and wall off the possibility of higher mortgage rates in the next few months.

In the meantime, get the best mortgage deals you can on If you have a good credit rating and some cash on hand, you can get still grab a rate in the low 5% range right now.

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at

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