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Mortgage Update 2/08/2022

nguyener

Member
Mortgage News 2/08/2022

The key events last week, stronger than expected labor market data and major central bank meetings in Europe, were negative for mortgage rates. As a result, rates climbed to the highest levels since early 2020.

The closely watched Employment report released on Friday exceeded expectations in nearly every area. Against a consensus forecast of 150,000, the economy gained 467,000 jobs in January, and revisions added a massive 709,000 jobs to the figures for prior months. Despite the surge in Covid cases, particular strength was seen in the leisure and hospitality sectors, which gained 151,000 jobs.

The unemployment rate unexpectedly increased from 3.9% to 4.0%, but this was mostly due to a huge number of people returning to the labor force in January, a sign of strength. Average hourly earnings, an indicator of wage growth, were an impressive 5.7% higher than a year ago, up from 5.0% last month. In short, the labor market remains extremely tight, and the effects of omicron on it likely will be very short-lived. Since stronger economic growth raises the outlook for future inflation, this report was unfavorable for mortgage rates.

Looking ahead, investors will closely follow news on the omicron variant and will look for additional Fed guidance on the pace of future rate hikes and balance sheet reduction.

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Tony Nguyen  | NMLS#93776
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