The unemployment rate for April was released just this past Friday and the Dow took off, closing up by triple digits. What caused the spike on Wall Street and what does that have to do with VA mortgage rates? The headline number, the actual unemployment rate, fell slightly to 5.4%. And while that’s good news, what got traders excited was the number of new jobs created for that same month. For April, there were 223,000 new non-farm jobs created. Not bad, but really nothing outstanding. To get the economy really moving once again, 300,000+ is typically the target number.
In March the number of new jobs created was a paltry 129,000 and mortgage rates fell slightly on the news and investors were looking to the April report for some sort of confirmation of a weaker economy or that March was a blip. Well, March appeared to be a blip and in fact the number of jobs created was revised downward to 85,000. But April told us that yes, the economy is growing but not at a pace that would cause any inflationary concerns requiring the Fed to start raising rates.
Instead, the report was good enough to show some signs of improvement yet not good enough to cause the Fed to step in. if the economy continues on this current trend and the employment reports for May continue in such a fashion, it’s very likely mortgage rates will remain in their current range for the remainder of the year, even into 2016. That’s a long time to peer into any crystal ball but if growth remains relatively weak, that’s better than negative growth and enough to keep the Fed on the sidelines. Don’t expect rates to make a dramatic fall, but in the current environment they shouldn’t move past 4.00% any time soon, either.