42,000 New Jobs = Higher Mortgage Demand
by Hiland Doolittle
According to the ADP National Employment Report, 42,000 private sector jobs were added in July as the Mortgage Bankers Association said financing applications for the purchase of residential real estate rose. Bankers attributed much of the rise to favorable mortgage rates The application rate increased by 1.3 percent in year-over-year comparisons.
The ADP report, which is often viewed as a precursor for the government’s employment report due on Friday, showed a nice jump in private sector hiring and seems to support a stabilization of the economy. Downsizing activity showed continued improvement in July but planned layoffs rose 6 percent to 41,676 according to consultant Challenger, Gray & Christmas.
The ADP report adjusted June’s employment figures to reflect a 19,000 gain in new private sector jobs compared to the 13,000 new jobs reported earlier. The optimistic private sector gains were offset by the prospect of continued downsizing. John Challenger reported that “While it is true that job cuts have increased in each of the past three months, the increases are so slight and the monthly totals so low when compared to recent years, that the trend in no way suggests a reversal of the significant slowdown in job-cut activity witnessed over the past year.”
Government led the way in job cuts for the fourth time this year. 7,193 government workers, a 36 percent increase, were laid off last month. The Challenger Co. says the government and the private sector will pare 105,969 jobs in 2010. Following the government, pharmaceutical companies are the next biggest sector in terms of layoffs. Some 37,010 job cuts are projected for the industry.
Demand For Home Loans Up
The Mortgage Bankers Association announced a rise in home mortgage applications for the third consecutive week, spurring optimism that the recovery was proceeding. Low interest rates were credited with the gains, which also spilled over into the modification and re-financing sectors of the industry.
30-year fixed rate mortgages average 4.6 percent, down 0.09 percent form the previous week. In year-to-year analysis, the new interest rates were well below the 5.17 percent at this time one year ago.
The real estate crisis has been struggling to gain momentum ever since the expiration of the federal government’s tax credit. Demand for new mortgages is 40 percent lower than in April when the credits were due to expire.
The Mortgage Bankers also reported that refinancing application increased by 1.3 percent. Refinancing is a key component of the government’s anti-foreclosure plan.
At the core of the housing problem has been consumer’s fears over employment. Kurt Gleeson of RealEstate.com said, “The housing market is sputtering. There is a smaller pool of buyers who can afford to purchase a home. The economy and more specifically, the sluggish employment market have excluded many potential buyers. Job growth remains Number 1 in importance for the housing market.”
Tags: 2009 Stimulus Package, Consumer Confidence, recession, unemployment, US Unemployment
About the Author - Hiland Doolittle
Hiland is a professional writer with extensive entrepreneurial experience. He is a graduate of St. George’s School Newport, RI and the State University of New York at Albany where he majored in history. He has been active in the real estate business for 30 years and has founded and sold several businesses.
Hiland currently writes for several financial sites and is a published author of the novel The Last Parade. He has recently completed a manuscript for a children’s book entitled Sami and The Minnow Man.
