According to Labor Department figures released this morning employers stepped up hiring in October – adding 171,000 new jobs to their payrolls. The government also said 84,000 more jobs were created in August and September than had been initially estimated. All of the gain in payrolls were in the private sector. The national jobless rate ticked higher to a reading of 7.9% as more people returned to the job market looking for work.
The initial knee-jerk reaction by mortgage investors to the stronger-than-expected October nonfarm payroll resulted in a slight tick higher for rates – but calmer, cooler heads soon took control and the upward pressure vaporized quickly. Experienced traders concluded even monthly payroll gains of 171,000 will only bring the jobless rate down at a glacier’s pace. In addition, there is certainly nothing in today’s October nonfarm payroll report likely to induce Fed Chairman Bernanke and his fellow central bankers to consider nudging benchmark short-term interest rates anytime soon. Under these conditions — and with the threat political brinkmanship may yet result in the government’s failure to avoid the “fiscal cliff” looming ahead on December 31st — the support mechanism for the near-term prospects for steady to perhaps fractionally lower mortgage interest rates remains solidly in place.
Next week’s exceptionally light macro-economic calendar will be overshadowed by investors’ reaction – or lack thereof – to Tuesday’s election results together with the onslaught of $72 billion of debt supply from Uncle Sam. The Treasury Department will be in the credit market on Tuesday looking to sell $32 billion of three-year notes, followed by the sale of $24 billion of 10-year notes on Wednesday and the three-part auction series will conclude on Thursday with the sale of $16 billion 30-year bonds. It appears corporate America will be exceptionally active in the credit markets next week as well. All this inbound supply may create a major case of indigestion for buyers. If this assessment proves accurate, the upward pressure on mortgage interest rates will likely increase as the week progresses.
Mortgage Rates as of November 2, 2012 ( purchase transactions )
30 day rate locks, subject to credit score and loan to value edits
30 year fixed 3.25% 0% origination fee
30 year fixed rate 3.375% (*LTV and credit score could impact this quote) ( .50 origination fee, 760+ score)
15 year fixed rate 2.875%
5/1 ARM 2.375%
7/1 ARM 2.75%