While the U.S. jobs market experienced some improvement in the month of July, it remains unclear what ramifications this would have on the housing market’s recovery.
Still, there are a few takeaways on the Bureau of Labor Statistics’ latest report that are a bit disconcerting. Due to a spike in mortgage rates that had started in May, financial institutions have lopped thousands of jobs in their mortgage banking divisions. Unemployment for young adults, on the other hand, increased to 7.8 percent, and only 74.8 percent of the so-called “millennial” demographic are currently working. That is the lowest share recorded for that metric since 2012.
Financial experts have expressed concern about the higher unemployment rates among young adults, who continue to hold themselves back financially by not purchasing new homes or, for that matter, moving out of their parents’ homes. But conversely, downward revisions made to July housing statistics have prevented mortgage rates from making any further stratospheric increases.
Conforming loan rates, after all, are tracked against mortgage-backed securities, which are, parallel to that, tracked against U.S. Treasuries.
“Rates are most of the way back down to yesterday morning’s levels,” posited Mortgage News Daily Chief Operating Officer Matthew Graham. “Not all lenders are out with rate sheets yet, but those who (have released their statistics) have moved back to 4.75 percent from 4.875 percent yesterday. It’s a bit of a consolation prize for now, as rates are still at their highest levels of the year with the exception of yesterday.”
Adding to this, Waterstone Mortgage loan officer Daniel Green predicted that the spate of negative revisions to employment numbers could keep rates lower going forward, but mortgage rates may go back up “when taper talk resumes.” Green added that a speech to be made today by San Francisco Fed President John Williams could be a barometer for further rate gyrations. “Hawkish remarks will move rates higher,” he forecasted.