Jan 10, 2012 | The Economy
Starting soon, nearly all home buyers and refinancing households throughout Massachusetts and nationwide will pay higher mortgage loan fees. Congress has made it law.
13 months ago, as part of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, Congress enacted a one-year cut to FICA payroll taxes.
FICA stands for Federal Insurance Contributions Act. Taxes collected under FICA fund such programs as Social Security and Medicare.
The stimulus plan temporarily lowered tax rates for salaried workers from 6.2% to 4.2%; and for self-employed persons from 12.4% to 10.4%. Effective January 1, 2012, “regular” tax rates were to return.
That is, until late-December 2011. In one of its last moves of the year, Congress passed a temporary, two-month extension to the payroll tax cut, extending it through February 29, 2012. The expected cost to the U.S. Treasury is $33 billion.
To recoup those costs, Congress has turned to Fannie (more…)
Jan 5, 2012 | The Economy
If you’re floating a mortgage rate, or have yet to lock one in, today may be a good day to call your loan officer. Friday morning, the government releases its Non-Farm Payrolls report at 8:30 AM ET.
The Non-Farm Payrolls report is more commonly called the “jobs report” and, lately, it’s been Wall Street’s domestic economic metric of choice. As jobs go, so go markets.
In the 12 months beginning November 2007, the economy shed 2.3 million on its way to losing more than 7 million jobs by the end of 2009.
It’s no coincidence that the stock market has been wayward. Jobs are a keystone in the U.S. economy and the connection between jobs and growth is straight-forward :
- Workers spend more than non-workers and consumer spending is the economy’s largest single component
- Workers pay more taxes to governments and, when governments have money, they build and spend on projects
- Additional consumer and government spending creates revenue for businesses which, in turn, hire more workers.
It’s a self-reinforcing (more…)
Jan 4, 2012 | The Economy
As the new year begins, there are no shortage of stories telling us what to expect in 2012. Housing finished 2011 with momentum and mortgage rates closed at the lowest rates of all time.
Some expect those trends to continue through the first quarter and beyond. Others expect a rapid reversal.
Who’s right and who’s wrong? A quick look through the newspapers, websites and business television programs reveals “experts” with opposing, well-delivered arguments views. It’s tough to know who to believe.
For example, here are some “on-the-record” predictions for 2012 :
The issue for buyers, seller, and would-be refinancers in Worcester and nationwide is that it can be a challenge to separate a “prediction” from fact at times.
When an argument is made on the pages of a respected newspaper or website, or is presented on CNBC or Bloomberg by a well-dressed, well-spoken industry insider, we’re inclined to (more…)
Dec 1, 2011 | The Economy
Have you been floating a mortgage rate? It may be time to lock.
At 8:30 AM ET Friday, the government’s Bureau of Labor Statistics will release its November Non-Farm Payrolls report. Better known as “the jobs report”, the monthly Non-Farm Payrolls figures provide sector-by-sector employment data, and tally the size of the current U.S. workforce size.
From these two elements, the national Unemployment Rate is derived.
Since topping out at 10.2% in October 2009, the Unemployment Rate has dropped to 9.0%. More than 2.3 million net new jobs have been made in the last 24 months.
Wall Street expect to see 125,000 more jobs added in November.
Depending on how closely the actual Non-Farm Payrolls data meets Wall Street expectations, Fitchburg rate shoppers could find that the mortgage market landscape has shifted beneath them. The jobs report is a mortgage-market catalyst and when its reported value differs from Wall Street expectations, the impact on mortgage rates can be palpable — especially in a recovering economy.
The connection between the jobs market and the mortgage market is straight-forward — as the jobs market goes, so goes the economy.
- When more people work, consumer spending increases
- When consumer spending rises, businesses expand and invest
- When businesses expand and invest, more people are put to work
Furthermore, employees and employers both pay taxes to governments. With more tax revenue, governments embark upon new projects which (1) require the hiring of additional workers, and (2) require the purchase and/or repair of additional equipment and supplies.
Employment can be a self-reinforcing cycle for the economy and that’s why Friday’s jobs report will be so closely watched. If the number of jobs created exceeds the 125,000 expected, mortgage rates will rise on the expectation for a stronger U.S. economy in 2012.
Conversely, if the jobs figures fall short, mortgage rates may fall.
Mortgage rates continue to hover near all-time lows according to Freddie Mac’s weekly Primary Mortgage Market Survey. The average 30-year fixed rate mortgage is sub-4.000 percent nationwide, with an accompanying fee of 0.7 discount points. 1 discount point is equal to 1 percent of your loan size.
If you’re under contract for a home or looking to refinance, minimize your interest rate risk. Lock ahead of Friday’s Non-Farm Payrolls release.
Get your rate lock in today.
Nov 2, 2011 | The Economy
Within the next 48 hours, mortgage rates may get bouncy. The Federal Open Market Committee will adjourn from a 2-day meeting and October’s Non-Farm Payrolls report is due for release.
Of the two market movers, it’s the Non-Farm Payrolls report that may cause the most damage. Rate shoppers across Massachusetts would do well to pay attention.
Published monthly, the “jobs report” provides sector-by-sector employment data from the month prior. It’s a product of the Bureau of Labor Statistics and includes the national Unemployment Rate.
In September, the economy added 103,000 jobs, and job creation from the two months prior was shown to be higher by 99,000 jobs higher than originally reported. This was a huge improvement over the initial August release which showed zero new jobs created.
When September’s jobs report was released, mortgage rates spiked. This is because of the correlation between jobs and the U.S. economy. There are a lot of economic “positives” when the U.S. workforce is growing.
- Consumer spending increases
- Governments start more projects
- Businesses make more investment
Each of these items leads to additional hiring, and the cycle continues. (more…)
Oct 13, 2011 | The Economy
The American Consumer is alive and well, it seems.
Friday morning, the Census Bureau will release its Retail Sales figures for September. The report is expected to show an increase in gross receipts for the 15th straight month with analysts predicting a 0.6 percent increase from August.
The projected increase represents the largest jump in Retail Sales in six months and would likely lead mortgage rates higher for buyers in Fitchburg and nationwide.
The connection between Retail Sales and mortgage rates is fairly straight-forward. Retail Sales are the majority component of “consumer spending” and consumer spending represents the majority of the U.S. economy — up to 70 percent, by some estimates.
And, as the economy goes, so go mortgage rates. (more…)
