Does the Jobs Report Move Mortgage Rates? What to Watch Friday, Nov 6

By Jerry L Kindig III, NMLS #2397823

If you're shopping for a home or thinking about a refinance, you might hear people say "wait for the jobs report" this week. That's not just market chatter. The monthly jobs report is one of the few scheduled events that can push mortgage pricing around in a single morning.

The October jobs report comes out this Friday, November 6, at 8:30 a.m. Eastern, which is 6:30 a.m. here in Arizona (BLS release schedule). Here's what it is, why it matters for your rate, and how I'd think about locking or floating around it.

What is the jobs report?

The official name is the Employment Situation report, and it comes from the U.S. Bureau of Labor Statistics. It shows how many jobs the economy added or lost last month, the unemployment rate, and how fast wages are growing.

For context, the September report showed the economy added only about 29,000 jobs and unemployment ticked up to 4.2%. Previews for Friday's October number are expecting a modest gain, but previews are just guesses. The real number can land well above or below them, and that surprise is what moves markets.

Does the jobs report actually move mortgage rates?

It can, but not directly. Here's the chain:

• Mortgage rates follow the bond market. Most lenders price fixed-rate mortgages off what investors are paying for mortgage bonds, and those tend to move with the 10-year Treasury yield. The Fed's own rate isn't your mortgage rate.
• Bond investors react to jobs data. A strong report (lots of hiring, rising wages) can make investors worry about inflation and expect the Fed to stay tough. That tends to push yields up, and mortgage pricing often follows.
• A weak report can do the opposite. Slow hiring or rising unemployment can send investors toward the safety of bonds, which can pull yields down and help mortgage pricing improve.

The catch is that it's not always that clean. Markets react to how the number compares to expectations, to revisions of earlier months, and to whatever else is going on that week. This week also has election results, other labor data, and news overseas in the mix. A "good" jobs number for the economy isn't always "good" for rates, and the reaction can flip by the afternoon.

If you read my post on what the Fed meeting means for mortgage rates, this is the same idea. The Fed held steady at its October 28 meeting, and its next decision is December 9. Friday's jobs report is the last big labor reading before then, so the market will treat it as a clue about what the Fed does next.

Other reports to watch this week

The jobs report gets the headlines, but it's not the only labor data out this week:

• Tuesday: Job openings (the JOLTS report) for September.
• Wednesday: ADP's private payroll estimate.
• Thursday: Weekly jobless claims and Freddie Mac's weekly rate survey.
• Next Tuesday, November 10: The October Consumer Price Index (inflation).

Any of these can nudge pricing a little. The Friday report is the one most likely to move it a lot.

Should you lock before Friday or float?

This is the question I get most in a week like this, and honestly, nobody can tell you which way the number will go. Anyone who promises they know is guessing. What I can help you do is make the decision based on your situation instead of a hunch.

Locking before Friday can make sense if:

• You're closing in the next 30 to 45 days.
• The payment you've been quoted already works for your budget.
• A move the wrong way would stretch your budget or your debt-to-income ratio past where you're comfortable.

Floating might make sense if:

• Your closing is further out and you have room in your budget if pricing gets worse.
• You've agreed with your loan officer ahead of time on a target, so you can lock quickly if pricing improves.
• You understand you could end up with a better rate or a worse one, and you're okay with either.

One practical tip: if you decide to float through the report, don't wait until Friday afternoon to talk to your loan officer. Lenders often reprice after big reports, and they tend to move faster when the market gets worse than when it gets better. Have your plan set before the number comes out. I go deeper on this in should I lock my mortgage rate today or wait.

What this means if you're still shopping for a home

If you haven't found a house yet, one jobs report shouldn't change your plan. Rates change daily, and you won't time the bottom perfectly. What matters more is knowing what payment you're comfortable with and being ready to move when the right home shows up.

A few things that actually help:

• Get pre-approved so you know where you stand. Here's the list of documents you'll need for a pre-approval.
• Figure out your comfortable price range with how much house you can actually afford.
• Run your own numbers in our mortgage payment calculator instead of relying on a headline rate.
• Compare more than one lender. Pricing on the same day can vary a lot, which is one reason people work with a broker. Here's how a mortgage broker compares to a bank.

FAQ

What time does the jobs report come out?
The October report is scheduled for Friday, November 6, at 8:30 a.m. Eastern, which is 6:30 a.m. Arizona time. The November report is scheduled for Friday, December 4.

Do mortgage rates go up or down after a strong jobs report?
Often up, because strong hiring can raise inflation worries and push Treasury yields higher. But it depends on how the number compares to expectations and what else is happening in the market that day, so there's no guarantee either way.

Is the jobs report more important than the Fed meeting?
They're connected. The Fed watches jobs data closely when it sets policy, so a big surprise in the jobs report can change what the market expects from the Fed's next meeting, and mortgage pricing can move on that expectation.

Should I wait for the jobs report to lock my rate?
Only if you can handle the chance that pricing gets worse. If you're closing soon and your current quote works, locking removes that risk. Talk through your timeline with your loan officer before Friday.

Want a second opinion before Friday?

If you're under contract or close to it and not sure whether to lock, send me your closing date and where you're at. I'll walk you through your options and shop your loan across lenders so you're comparing real numbers. You can browse our loan programs or reach out through our contact page.

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Not all clients will qualify for these products. Eligibility and availability vary by program and borrower. This article is for general information only and is not a prediction of future rates. It is not a commitment to lend or an offer of credit. Rates and programs change daily and are subject to credit approval, underwriting, and property eligibility.

Jerry L Kindig III, NMLS #2397823 | Loan Factory, NMLS #320841 | Equal Housing Opportunity