Mortgage update – Feb. 7, 2011

The January Jobs Report came out, and the numbers were interesting. The report showed just 36,000 jobs created in January, where the market was expecting a much higher number of 148,000. It is expected that this number will be revised in the coming months. Last month’s figures were revised to include an additional 40,000 jobs. While new jobs came in well below expectations, the Unemployment Rate dropped to 9% (from 9.4%), and this was definitely not expected. It raises questions as to the accuracy of the numbers reported. The unemployment figure might be taking into account people who have stopped looking for a job but are not necessarily employed.

In the news, the market acted confused and there was a selloff. As a result, rates are up. Looking forward, the employment report is seen as a gauge for the overall strength of the economy and a trigger for the Federal Reserve to increase rates. Just last week, the market predicted a 52% chance that the Fed will next increase rates in January of 2012. As of today, that number went to 100%.

Dan Spitz
Private mortgage banker
Wells Fargo Home Mortgage
(310) 306-7940