7 January 2011 – The word of the week is jobs. For months, we have heard economists near and far assure us that as go jobs so goes the economy. After all, to buy goods and pay their mortgages, consumers need a steady and predictable source of income, i.e. a job. Now after painful year of anemic employment, it appears that we may finally seeing a sustained turn around in the jobs sector.

While we have heard this before, the beginning of this week actually presented us with some tangible signs of the improvements. Specifically, ADP announced a private sector job growth number of approximately 297,000 jobs. This figure represents the biggest increase since 2001. Mortgage rates jumped on this data, but these moves may only be the tip of the iceberg. Friday is the day when the government releases their official employment numbers. If these numbers fall in line with the ADP figures, the financial markets will perceive this as a positive indicator and the bond market will suffer setbacks. Rates will see another significant increase as a result.

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My mortgage rate lock advice for my clients is based heavily in defensive thinking. IF closing in 7 days or less LOCK. If closing in 7 to 30 days, I would suggest FLOATING with extreme caution. With this much volatility, I would LOCK on any improvements as well as any major upward repricing. You do not want to miss the boat.

[Update] Well, this time we ate the bear. The government jobs report, which came in mixed, is generally accepted as a disappointment. While overall unemployment did drop, the number of jobs created did missed expectations. The end result is a reprieve for those squarely on the fence on what to do and those in the process of buying a property who have not locked a final rate. I want to stress that this should not by any means lull anyone into a false sense of security. Think of it as a shuttle launch that has been delayed due to technical issues. Like the shuttle, the rate rocket will, at some point launch, but not today.