Sacramento Mortgage Rate Update: The August Jobs Report

For those curious about the direction of mortgage interest rates, the August jobs report released this morning was a highly anticipated economic signpost.

Several noteworthy figures emerged.  First, the loss of 4,000 jobs in August (vs. the expected rise of 114,000) was a huge surprise and the first such decline since August of 2003.  Underscoring that point, the two prior month’s numbers were revised downward, to 69,000 from 125,000 in June and to 68,000 from 92,000 in July.

That shows a dramatic slowing of jobs during the second quarter job of this year, the period during which the sub prime mortgage problem burst out of its box and took the global center stage.

Expectations are increasing for a Fed rate cut later this month and for a possible series of cuts as the economy slows.  If corporate earning continue to disappoint, look for the Fed to begin taking steps to forestall a recession.  

Mortgage rates for conforming 30 and 15 year fixed rate loans should ease in anticipation of the expected Fed cut on the 18th.

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