According to MMG Weekly by Alan World of GEM Mortgage:
“Unemployment Rates hit a 5-year low in September, falling to 7.2 percent. This was fueled to some degree by workers entering retirement and those Americans opting out of the workforce in a stagnant job market. And in the latest Weekly Initial Jobless Claims Report, claims fell by 12,000 in the latest week but still came in above expectations. The bottom line is that we are simply not seeing any meaningful improvement in the labor market.
What did this mean for home loan rates? Remember that weak economic news normally causes investors to move their money into safe investments like Bonds. This includes Mortgage Bonds, to which home loan rates are tied. We saw that dynamic in the markets last week, as Bonds rallied after the weak Jobs Report was released, helping home loan rates reach their lowest levels in four months.
Also still helping Bonds and home loan rates is the Fed’s current Quantitative Easing program, in which the Fed has been purchasing $85 billion in Bonds and Treasuries each month to stimulate the economy and housing market. With key economic reports delayed due to the shutdown–and with the September Jobs data weaker than expected–there is not much chance the Fed will taper its purchases at its meeting this week. This should help keep home loan rates attractive through the remainder of 2013.”
For the complete report, click here.