Mortgage Rates Drop Even Further

June 3, 2005 LOS ANGELES -- On Friday, the U.S. Department of Labor released the much anticipated full Employment Situation Report. The report reflects figures related to U.S. Jobs for May. Among numerous calculations and numerated facts, of particular importance is the measure of the number of unemployed persons as a percentage of the total labor force. It is a primary indicator of economic activity on a monthly basis, and important right now with regard to how it affects mortgage rates.

Friday's report indicates that 78,000 new jobs were created in May. This came as a shock to many, as forecasts indicated previously that there would be somewhere in the range of 175,000 new jobs created in May. The bottom line is that the report shows significant potential for deceleration of job growth, which will further contribute to economic weakness.

On the other side of the proverbial coin, U.S. bond market heavy-hitters are smiling widely, as they are likely perceiving the report's data as a sign of lower inflation.

After the report was released Friday morning, the 10 year Treasury yield dropped to 3.83%. This is a low we haven't seen since 2004. As a result, home lending mortgage interest rates continue to drop. I anticipate a decrease in rates in the forthcoming week, or at very minimum stability at these low levels.

- By Stockton Marquette, Mortgage Market Analyst and Columnist. Email Mr. Marquette.

© 2006 CMR. All rights reserved.