Despite a recent increase in the national unemployment rate, initial jobless claims trended lower during the week ending June 2. This could give potential borrowers the financial safety and soundness needed to make the transition to homeownership in the coming months.
Fewer American filed for federal unemployment assistance last week, according to the Department of Labor. An estimated 377,000 claims were filed, which is a decline of 12,000 from the end of May, when 389,000 individuals requested unemployment benefits.
"It's pretty clear claims are stabilizing," Action Economics chief economist Michael Englund told Bloomberg. "It's hard to make the case that there's any upward tilt to growth, so companies are being cautious."
Fewer claims than expected
This outcome was slightly lower than initial estimates from a number of industry professionals. According to a Bloomberg survey, analysts anticipated there to be 383,000 jobless claims after a range of estimates between 367,000 and 390,000. However, since there were fewer claims than expected, this could be enough to offset the disappointing job creation numbers seen in May, some experts claim. An estimated 69,000 employment positions were added to the economy during the month.
In addition to the improvements in the job market, mortgage rates reached new all-time lows during the week ending June 7. The pairing of these two variables could make the possibility of owning a home much more affordable as the market enters its peak season for activity.
Rates fall for six straight weeks
The average rate for a 30-year fixed-rate mortgage fell to a record low of 3.67 percent, according to a report from Freddie Mac. This is a notable decline from the previous week when it averaged 3.75 percent. In addition, the rate for a 15-year FRM averaged 2.94 percent.
"Fixed mortgage rates reached new record lows for the sixth consecutive week as long-term Treasury bond yields declined further following downwardly revised economic growth and job creation data," said Freddie Mac vice president and chief economist Frank Nothaft.
Additionally, gross domestic product increased nearly 2 percent during the first three months of the year, Nothaft added. This is a major indicator that the economy could finally be stabilizing.
Not only do these affordable rates provide numerous purchase options to owning property, a number of current borrowers are utilizing them to restructure their home loans into more favorable terms. Last week the Mortgage Bankers Association indicated that 76 percent of all application activity is made up of refinance requests.