Mortgage Rates Sink as Record-making Jobs Report Released

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CF Funding comments on April's unemployment rate announcement and its impact/relation with mortgage rates.

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Normally a positive jobs report results in a higher interest rates, but Friday was quite different!

CF Funding was shocked to see that mortgage rates decreased Friday May 2nd after the record-making jobs report was released, revealing that total nonfarm payroll employment rose by 288,000 in April. A news release from the Bureau of Labor Statistics hit headlines on Friday as the unemployment rate fell to 6.3 percent, which is much lower than forecast, and is the lowest level in 5 years. Normally a positive jobs report results in higher interest rates, but Friday was quite different!

The forecast for April was 210,000 new jobs, which was 78,000 short. Some economists expected the severe weather to continue to hinder job growth into the Spring season. According to Scott Neuman of NPR on May 2nd, “April represents the largest burst of hiring in months. Figures for February and March were revised upward, giving an average for each of the 3 months of 238,000.” CF Funding is pleased to see such a positive jobs report as more Americans are back to work in April.

As the number of jobs increased, the unemployment rate fell from 6.7 percent to 6.3 percent. The number of people unemployed dropped by 773,000. This totals to a decrease in unemployment of about 1.9 million people over the past year. Major worker groups with unemployment rate declines included adult men at 5.9 percent, adult women at 5.7 percent, teenagers at 19.1 percent, whites at 5.3 percent, blacks at 11.6 percent, and Hispanics at 7.3 percent. The number of those unemployed on a long-term basis (27 weeks or more) saw a major decline of 287,000 an April and is now at 3.5 million. The number of persons employed part time for economic reasons was hardly changed, at 7.5 million in April.

Mortgage News Daily said one reason for the decrease in interest rates despite such a positive jobs report could be “disconcerting headlines surrounding Ukraine/Russia conflict…with the most notable being Russia’s request for an emergency meeting with the UN Security Council,” however “markets often use these sorts of events as cover and justification for trading decisions that might otherwise seem to not make enough sense.” Whatever the reason, CF Funding is happy for homebuyers that are able to take advantage of these great interest rates, with 30 year fixed rate mortgages reaching as low as 4.125% in some areas.

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Giorgio U Ferrero
CF Funding
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