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Jobs Report Lifts Rates Above 4 Percent
By Steve Cook
RISMEDIA, Tuesday, October 11, 2011— The U.S. economy added more jobs than expected last month, and employment gains for the previous two months were revised higher—not great news considering the jobless rate is unchanged at 9.1 percent, but good enough to stop mortgage rates from setting new records.

Recently, the BLS reported some 137,000 jobs were added to private sector payrolls in September. Economists surveyed by Dow Jones Newswires expected payrolls would rise by 60,000 last month. As result, mortgage rates on a 30-year fixed moved above 4 percent after hitting an all-time record low earlier in the week.

The 30-year fixed-rate mortgage dropped below 4 percent for the first time in modern history to 3.94 percent during the week ending October 6, according to Freddie Mac’s weekly survey.

The general persistence of tight underwriting guidelines and a relatively high percentage of underwater loans in the market generally continue to limit the number of borrowers that can qualify.

Freddie’s survey for the most recent week also shows the average rate for a 15-year fixed-rate mortgage dropped two basis points to an all-time low at 3.28 percent, while the average rate for the five-year Treasury-indexed hybrid adjustable-rate mortgage slid 6 basis points to 2.96 percent. Mortgage professionals saw rates rising and staying above 4 percent for the near term.

“For now, the outlook for the two factors that drove mortgage rates to new all-time lows, a weak US economy and fears over the EU debt crisis, appear better. As a result, mortgage rates have risen by about .25 percent,” says Evan Swanson, a mortgage professional with Mortgage Trust, Inc., who believes the rates may rise in the near-term.

“From a technical perspective, rates may get worse in the near-term. The 10 year Treasury note is currently at 2.09%. Should the 10 year Treasury yield close above 2.04%, it would be a bad technical signal for rates. In that event, I will shift my outlook to locking” Swanson states.

For more information, visit www.realestateeconomywatch.com.

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