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Weak
Economic Growth Helps Mortgage Rates
After
dropping to the lowest level in decades last week, mortgage rates fell even
further this week. Weak economic data from the US, Europe, and China caused
investors to question the pace of the global economic recovery. Slower
economic growth was positive for mortgage rates and negative for the stock
market.
Friday's
important Employment report reflected a slowly improving labor market. The
economy lost -125K jobs in June, which was very close to expectations. The
figures include a loss of -225K census workers who completed their
temporary assignments. The private sector added 83K jobs. The Unemployment
Rate fell to 9.5% from 9.7% in May, but this was due to 650K people leaving
the labor force. The labor force consists of everyone in the US who either
has a job or is looking for one, and the
Unemployment Rate measures the percentage of the labor force without jobs.
There
was mixed news in the housing sector this week. May Pending Home Sales declined 30% from April, as many buyers rushed to sign
contracts ahead of the April 30 deadline to qualify for the home buyer tax
credit. On a more positive note, the "close-by" deadline for the
home buyer tax credit has been extended to September 30. Although the tax
credit is not available for new contracts signed after April 30, extremely
low mortgage rates and high home affordability levels make conditions very
favorable for home purchases.
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