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2014-12-05 14:38:21
Borrowers Beware:Fed to Raise Rates Sooner Than La

Borrowers Beware: Robust Jobs Report May Push Fed to Raise Rates Sooner Than Later

Borrowers Beware: Robust Jobs Report May Push Fed to Raise Rates Sooner Than LaterThe jobs report for November flew past projections, with the largest number of jobs gained in nearly three years and hourly wages seeing a pick up. But the positive in the employment outlook could signal a negative for borrowers: higher interest rates.

The Federal Reserve could be closer to raising interest rates, with some economists predicting a move in the first half of 2015 if the parameters set by Fed policymakers are in place. A robust employment picture is the biggest factor.

For now, homebuyers are enjoying the lowest mortgage rates since May 2013. This week, Freddie Mac said the 30-year fixed rate had fallen to 3.89 percent, its lowest level of the year.

The Labor Department said on Friday that nonfarm payrolls surged by 321,000 last month, the most since January 2012, The unemployment rate held steady at a six-year low of 5.8 percent.


“I think it will put pressure on the Fed to raise rates in the first half of next year by June, perhaps even March,” Craig Dismuke, chief economist at Vining Sparks in Memphis, told Reuters.

November was the 10th straight month with job growth surpassing 200,000, the longest stretch since 1994. The strong jobs market is an indication the the U.S. recovery is weathering slowdowns in China and Europe, and a recession in Japan.

Average hourly earnings for all employees on private nonfarm payrolls rose by 9 cents to $24.66 in November. Over the year, average hourly earnings have risen by 2.1 percent, the Labor Department said.


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