Will a big change in the rate of unemployment in the US announced today result in a big change in current mortgage rates today? Probably not, but it does keep the pressure on for rates hikes in the future once the European debt crisis is resolved.
An unexpected and significant drop in the nation’s unemployment rate in November has surprised economic analysts this morning. Despite a positive, but less than stellar Non-Farm Payrolls report in which 120,000 new jobs were created in November, the unemployment rate dropped from 9.0% to 8.6%. The change was due to an upward revision by 72,000 new jobs in the previous report.
It is now abundantly clear that the US economy is strengthening which would normally have the effect of pushing rates higher. But for the debt crisis in Europe and the potential it has to slow this new-found strength in the US our mortgage rates would have already seen a significant move higher. Commenting on the impact of the European crisis relative to the US economy, Philadelphia Federal Reserve President Charles Plosser said, “In fact, a lot of the good news about the U.S. economy, the domestic economy, got sort of washed away in the wild speculation about things that are going to happen in Europe.”
What’s new today across the pond? Strong talk from German President Angela Merkel and French President Nicolas Sorkozy dominated the headlines today. President Merkel reiterated her opposition to the development of so-called “euro-bonds” that would be backed by all Euro-Zone countries for the benefit of those struggling nations finding it difficult to refinance their debt. Her description of the dialogue surrounding “euro-bonds” was succinct and to the point—“pointless”. French President Sarkozy was similarly direct in discussing the development of a more integrated political union in Europe saying, “The reform of Europe is not a march towards supra-nationality.” Without German and French agreement we are a long way from a solution.
I expect very little change in mortgage rates today so if you are in need of a mortgage for a refinance or purchase, today is a great day to lock-in rates.
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