Job Market Continues Recovery; Economy Getting Boost From Low Mortgage Rates

Job Market Continues Recovery; Economy Getting Boost From Low Mortgage Rates
A customer walks out of a U.S. Post Office branch and under a banner advertising a job opening, in Seattle on June 4, 2020. (Elaine Thompson/AP Photo)
Tim Shaler
10/15/2020
Updated:
10/15/2020
Commentary
Today, two key pieces of data were released. One will be reported correctly, and for the other, we would expect most news outlets to focus on the wrong thing.

About 1 Million per Month Are Leaving Job-Loss Government Programs

Today, the Bureau of Labor Statistics reported lots of information regarding the U.S. job market. Most news outlets will report only that the number of people filing for “initial” (first time) unemployment benefits was up over the previous week.  
However, this is the most important paragraph in the weekly report:
“The total number of people claiming benefits in all programs for the week ending September 26 was 25,290,325, a decrease of 215,270 from the previous week. There were 1,415,539 persons claiming benefits in all programs in the comparable week in 2019.”
In other words, when all the programs in addition to state unemployment insurance are considered, people are still leaving support systems at a rate of about 1 million persons per month.

Mortgage Rates at 50-Year Lows

The other key piece of economic news today came from one of the two traditional buyers of mortgages, Freddie Mac. Freddie, or the FHLMC, is the Federal Home Loan Mortgage Association. It buys mortgages originated from banks and loan origination companies. After it aggregates many of those mortgages, it puts them into a financial trust, which issues bonds so that company has more money to buy more mortgages. Fannie Mae, or the FNMA, does the same thing. Currently, the U.S. Federal Reserve is the major buyer globally of bonds issued from Freddie and Fannie.
Freddie Mac today reported the results of its weekly “Primary Mortgage Market Survey”—the best indication of last week’s rates on mortgages. The survey shows that as of today, Oct. 15, the average rate for a 30-year fixed-rate mortgage (with 0.6 points) was 2.81 percent—literally the lowest ever reported, in 50 years of data collection. Freddie also reported that the average rate for a 15-year fixed rate mortgage was 2.35 percent (with 0.5 points). 
These very-low rates will do much to facilitate more “cash-outs” (people refinancing their pre-existing mortgages so they can borrow additional more money). These low rates will also continue to help families and individuals seeking larger homes or homes in less dense areas.
Tim Shaler is a professional investor and economist based in Southern California. He is a regular columnist for The Epoch Times, where he exclusively provides some of his original economic analysis.
Tim Shaler is a professional investor and economist based in Southern California. He is a regular columnist for The Epoch Times, where he exclusively provides some of his original economic analysis.
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