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You Know Things Are Different When…
You know things are different when big money is now more afraid of a weak Employment Situation Report (aka Jobs Friday release) then a strong one. Let me explain. Remember the days when the economic nerd in you would sit around the TV the 1st Friday morning of each month, precisely at 8:30 a.m., and wait for CNBC to release the latest jobs report? Do you remember what you and most other Mortgage Participants were praying for? I’ll remind you. You were praying for a weak jobs number so the Federal Reserve would either increase or at a bare minimum maintain their current easy monetary policy stance so mortgage rates would (hopefully) go lower. Ringing a bell yet?
Well today is one of the first times I can remember where you could almost feel the entire market praying for the opposite of that. The world has grown tired of a weaker-than-expected economic growth, tired of having to rely on Fed stimulus, and is yearning for a return of the Goldilocks times when the US economy could stand on its own but rates and inflation were still low enough to make financing affordable and stock valuations reasonable.
Well the market got what it wanted today. Between Wednesday’s very strong ADP private payroll report and today’s favorable jobs report (which included a 0.2% increase in income) the market seems content. We got enough evidence of growth to keep the animal spirits interested but not so much evidence of growth to be concerned with runaway inflation(or stagflation).
Trust me when I tell you this is exactly what Mortgage Participants want too. Yearn all you want for a return of the refinance market but I got to tell my friend…it ain’t coming back anytime soon. So recognizing that your operating environment has permanently changed now ask yourself the same question – “What kind of Jobs report would I like to see?” Your answer should be something like this: “I’d like a jobs report strong enough to make the average consumer living in an apartment, in their parents basement, graduating from college, or returning from the military strong enough to make buying a new home something I feel confident in being able to do.” Trust me once again when I say this is far, far better for us all than living at the mercy of a refinance market that went on far too long. Jobs are far more important to home ownership than interest rates!
So What Does This Mean For Mortgage Participants?
It means that despite an end to the “Halcyon Days of Refi”, when you could fill any purchase production gap with a slew of refinances, we’re beginning to enter an era of added growth and greater confidence. This is great for the housing market. The downside to this is higher interest rates – the upside is the potential for a long period of increased home purchase activity. So at the risk of sounding like a broken record, what are you waiting for? Business plan, focus, build, be accountable and create a more lasting income stream by recognizing the microenvironment and taking action.