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Bleak report on jobs cuts mortgage rates Mortgage rates tumbled on Friday to about 5.75 percent from 6 percent on Thursday in response to a worse-than-expected national job report. "If this softness in the economy continues, rates will go all the way to their historic lows of 5.25 percent," predicted Lou Barnes, principal of Boulder West Financial. "It's not just the job market, but rising oil prices and the stock market hitting air pockets," which caused the drop in rates. Payroll figures released early Friday showed employers added just 32,000 jobs last month, a far cry from the 243,000 new jobs anticipated. Alan Greenspan, chairman of the Federal Reserve Board, which many expected to raise its short-term, overnight rates when it meets on Tuesday, may have to change course, according to Barnes and others. "The Fed may have to abandon its campaign to raise interest rates, even though the drumbeat had been focusing on higher rates from the Fed," Barnes said. "This is all very confusing for the consumer," he added. "But if you're in the market to buy a house anyway, you should throw a party." Scott Odron, owner of Denver-based Lending Corp.com, said 30-year mortgages even dipped slightly below 5.75 percent by the end of Friday. "It's quite a volatile time," Odron said. "There's one camp of analysts who say you should lock in interest rates right now, and take advantage of a window of plummeting rates because of the weak job market." Others predict that rates will go even lower, especially if the Fed doesn't raise rates on Tuesday. "Sometimes I think this supposed recovery is more Wall Street- than Main Street-generated," Odron said. Peter Lansing, president of Universal Lending, said he thinks the bad job numbers caught Wall Street by surprise, which led to a flight of capital to the safety of the bond market, causing mortgage rates to fall. "My personal belief is that the economy is not as strong as the (Bush) administration believes it is," Lansing said. But Lansing said if rates continue to drop, they will do so in very small increments. "Psychologically, it is important if rates are below 6 percent," Lansing said. Along with lower rates, he thinks home sellers increasingly are dropping the price of their homes because of the glut of unsold homes on the market and the lackluster economy. "With home prices coming down and interest rates at or near 40-year lows, I can't imagine a more perfect time to buy a home." The low rates also give homeowners who missed previous opportunities to refinance another chance, Barnes said. But he said the latest rate drop happened so swiftly "that nobody knows about it."
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