Mortgage rates continued to remain below 2.9% for the last eight straight weeks. Specifically, according to the finance mortgage provider Freddie Mac, the 30-year fixed mortgage rate was unchanged from the previous week at 2.87%.
What comes next? Job growth seems to be very critical for the following several months as it will indicate when Fed’s tapering will likely start. There is ample talk about the Fed cutting its monthly bond purchases before the end of the year. While the Fed’s asset purchases help rates stay lower than they otherwise might be, expect mortgage rates to rise further when the Fed will raise interest rates since rising interest rates increase the cost of mortgages. Nevertheless, that won’t likely happen until the economy hits full employment.
In the meantime, jobs are coming back strongly especially during the summer months. Nearly 1.9 million jobs were added to the market during June and July. If job creation continues at this pace, nearly all jobs will be recovered by the first quarter of next year. Nevertheless, as of July, we are still missing nearly 6 million jobs compared to pre-pandemic.
Parsing out by age, we are seeing that Millennials were the most affected by the pandemic. Twenty-three percent of the people who lost their jobs in April of 2020 were from the age group 25 to 34. This translates to nearly 5 million people in this age group losing their jobs in the beginning of the pandemic. Interestingly, the job growth for this specific age group is very strong since about 4.1 million people 25 to 34 years old have already found a job. We also see that nearly everyone in the age group 35 to 44 who lost their job last year was able to reenter the job market. See here how many jobs are missing by age group:
As more Millennials return to the workplace, demand for housing is expected to remain strong as they set their sights onto homeownership especially with historically low mortgage rates. The National Association of REALTORS® forecasts existing home sales to rise 6% in 2021 compared to a year earlier.