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CCL Market Update: Jobs Report, Home Prices, Loan Programs, Mortgage Rates

The jobs report for January exceeded expectations, making U.S. economists thrilled about the strengthening labor market. Payrolls advanced by 257,000 in January, after significant upward revisions in both December and November. After the revisions, the three month-average of 336,000 new jobs added represented the biggest gain in 17 years. Similarly, the number of people who switched from a status of “not in the labor force” to “employed” displayed the largest jump since 1990.

In spite of the large numbers of jobs added in recent months, the unemployment rate edged higher from 5.6% to 5.7% as more and more Americans return to the labor force to look for jobs. While the unemployment rate has fallen dramatically from 10% in autumn 2009, the number of persons employed is barely 2 million higher than it was before the Great Recession began in January 2008.

Another positive from the employment report was that wage growth in the U.S. is picking up. Average hourly earnings increased 0.5% last month for the largest monthly gain since November 2008. That’s a big jump!

A little closer to home, the jobless rate for San Luis Obispo County dropped to 5% in December, down from 5.8% in December 2013 and below the 5.5% reading in November. Gains in leisure and hospitality led job growth followed by the educational and health services industry. Atascadero reported the lowest jobless rate in the county at 4.1%.

January also brought gains in the oil industry. Crude oil displayed the biggest two-week rally in nearly 17 years, jumping 18% in the past 10 trading days. Additionally, the price volatility rose to the highest in approximately 6 years. Companies such as BP and Shell reduced investments, and U.S. drillers pulled more rigs off the oil fields, contributing to the oil rebound.

Home prices are still 13.4% below the April 2006 level across the U.S. Home price increases slowed their pace in December of 2014, rising only 5% from the previous year. However, this slowdown could benefit the housing market this year. Smaller price increases and lower mortgage rates could likely prompt a rebound in home sales for 2015. Although pending home sales fell 3.7% in December, the index experienced its highest year-over-year gain since June 2013, coming in at 11.7%. Economists expect a boost in sales for 2015 due to lower mortgage rates and lower down-payment requirements on mortgages from Fannie Mae and Freddie Mac.

This should be a fairly quiet week with very few economic reports of significance due out. We have Retail Sales and a pair of consumer confidence reports due out later in the week.


Loan Program News

Applications for government-backed loans increased significantly after the FHA announced that annual insurance premiums were being cut by 0.5%. According to the Mortgage Bankers Association, the total volume of mortgage applications increased 1.3% last week compared to the previous week. It is clear that many more people are considering mortgages to purchase or refinance a home due to the drop in insurance premiums, along with down-payments as low as 3.5% on FHA loans and 3% through Fannie Mae.

You should consider refinancing if you have an interest rate above 4%, if you have a loan with mortgage insurance, or if you are interested in getting into a shorter term.


Mortgage Rates

Rates continue to be at the lowest levels in more than 20 months! The average interest rate for a 30-year Conventional Conforming loan declined -4 bps to 3.79%, compared to 4.47% one year ago, according to Freddie Mac. Take advantage of these rates while they’re still low! Call us at 805.534.LOAN for your free customized rate quote!

Central Coast Lending’s current rates for San Luis Obispo County include a 30-year Conventional loan at 3.625% (3.663% APR) and a 30-year FHA loan at 3.25% (4.823% APR). For a more in-depth look at the rates we offer, visit our Mortgage Rates page!

Written by Central Coast Lending - Go to Central Coast Lending's Website/Profile