Weak Jobs Market Helps Pull Mortgage Rates Down

Suggestions of a weakening economy would reduce demand for housing.

Mar 6, 2014 at 12:46PM

Freddie Mac released its weekly update on national mortgage rates on Thursday morning, showing rates dropping nearly across the board.

Both 30-year fixed-rate mortgages (FRMs) and 15-year FRMs declined over the past week, with 30-year FRMs getting nine basis points cheaper (to 4.28%), and 15-year FRMs dropping seven b.p. (to 3.32%).

5/1 adjustable-rate mortgage (ARM) rates likewise declined, slipping two basis points to land at 3.03%. 1-year ARMs held steady at 2.52%.

Explaining the results, Freddie Mac vice president and chief economist Frank Nothaft  pointed to a revision to Q4 2013 GDP data, showing the economy grew at only a 2.4% annualized rate last quarter. Jobs data for February showed weaker-than-expected employment growth of just 139,000 private-sector jobs, Nothaft noted in his statement. What's more, the data for January were revised lower, to just 48,000 jobs gained.

All of this suggests a weakening, or at least slower-growing economy, which should tend to keep a lid on inflation, reduce demand for housing, and reduce demand for home-buying loans -- hence the lower prices for mortgages.




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4 in 5 Americans Are Ignoring Buffett's Warning

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Jun 12, 2015 at 5:01PM

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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