The economy added more jobs in June than expected, making it unlikely that the Federal Reserve might delay plans to begin tapering its stimulus program later this year.
According to the Bureau of Labor Statistics, employment increased by 195,000 nonpayroll jobs in June. That wasn’t enough to push down the unemployment rate, which held steady at 7.6 percent.
“Today’s strong jobs report makes it more likely that the Fed will start reducing its bond purchases later this year rather than waiting longer, which should push mortgage rates higher,” said Jed Kolko, chief economist at Trulia.
Recent statements from Fed officials indicating that the central bank intends to trim its bond purchases this year have sent interest rates soaring in recent weeks, with investors seeking to offload Treasuries and mortgage-backed securities before a Fed pullback chips away at their value.
The average rate on a 30-year fixed-rate mortgage jumped from 3.35 percent in the first week of May to 4.46 percent in the first week of July, according to Freddie Mac data.
“Rising rates won’t derail the housing recovery, however,” Kolko said. “They’re rising alongside a strengthening economy.”