Why is the Jobs Report so important to mortgage rates?

MortgagePorter-JobsReportTypically on the first Friday of every month, the Bureau of Labor Statistics releases the Employment Situation Summary, otherwise known as The Jobs Report. This report details specific employment trends, including how many Americans are employed with “non-farm” jobs, trends in various fields of employment, income and hours worked. It also includes the “official” unemployment rate. The data contained in the Jobs Report carries a lot of weight and is considered one of  our country’s stronger economic indicators.

Often times, the data from the Jobs Report may impact mortgage rates different than one would think. A strong Jobs Report, showing jobs added or wages increasing may translate to wage inflation. Inflation tends to negatively impact bonds, like mortgage backed securities, and may cause rates to trend higher. The reverse is also true, a weak Jobs Report may cause mortgage rates to improve as investors seek the safety of bonds.

The Jobs Report is so important that the Fed has tied their economic stimulus participation (such as buying mortgage backed securities/bonds to keep mortgage rates artificially low) to the unemployment rate. The Fed has indicated they will continue with the current policy until the unemployment rate is below 6.5%. Once the Fed stops buying mortgage backed securities, keeping rates artificially low, you will see mortgage rates trend dramatically higher. Some suggest our current conforming rates would be more in line with non-conforming/jumbo rates.

This morning’s Jobs Report

This morning the Jobs Report was released with data coming in stronger than anticipated with employers adding 165,000 jobs vs. the 155,000 expected for April. Positive revisions totally 114,000 were made to March and February’s reports. This is causing mortgage rates (although still very low) to trend higher.

The unemployment rate is at 7.5%.

As I write this post (8:15 am), the DOW is up 170 at 15,001. Remember, when stocks are rallying, mortgage rates tend to trend higher too as investors will trade the safety of bonds (like mortgage backed securities) for a potentially better return.

My team and I are happy to help you with your mortgage for homes located anywhere in Washington state, where I’m licensed to originate mortgages. Click here if I can provide you with a mortgage rate quote for your home.


  1. […] mortgage interest rates, including the Fed meeting on Wednesday and Jobs Report on Friday. The Jobs Report carries a lot of weight with mortgage rates as it may indicate inflation. As the economy and […]

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