Tomorrow morning, at 8:30 AM ET, the Bureau of Labor Statistics releases its Non-Farm Payrolls report for May. If you’re floating a mortgage rate right now — or are in the process of shopping for a loan — consider locking your rate sooner rather than later.

The Non-Farm Payrolls report can be a major market mover, causing large fluctuations in both conforming and FHA mortgage rates. It’s because of the report’s insight into the U.S. economy.

More commonly called “the jobs report”, Non-Farm Payrolls is issued monthly. Sector-by-sector, it details the U.S. workforce and unemployment rates. 

Jobs momentum has been strong. Through 7 consecutive months, the economy has added jobs, the government reports. Nearly 1 million new jobs have been created during that time. These are strong figures for a country that lost 7 million jobs in 2008 and 2009 combined.

However, Wednesday, a weaker-than-expected “preview” figure from payroll company ADP has Wall Street wondering whether this month is the month that the winning streak ends.

May’s ADP data fell so far short of expectations that investors have had to re-assess their job growth predictions. Earlier this week, the consensus was that 185,000 new jobs were created in May. Today, those estimates are much lower.

The change is leading mortgage rates lower, too.

The connection between jobs and mortgage rates is somewhat straight-forward. Job growth influences mortgage rates because jobs matter to the economy. As job growth slows, so does the economic growth, and that puts downward pressure on mortgage rates.

The opposite is true, too. Strong job growth tends to lead mortgage rates higher.

So, with job growth estimates revising lower, Wall Street has adjusted its “bets” and that’s benefiting rate shoppers. Should the actual jobs figures not be so bad, though, expect a quick and sharp reversal; and much higher mortgage rates for everyone.

The safe move is to lock your rate today.

Another quarter, another sign that mortgage lending may be easing nationwide.

The Federal Reserve’s quarterly survey of senior loan officers revealed that an overwhelming majority of U.S. banks have stopped tightening mortgage requirements for “prime borrowers”.

A prime borrower is one with a well-documented credit history, high credit scores, and a low debt-to-income ratio.

Of the 53 responding “big banks”, 49 reported that mortgage guidelines were “basically unchanged” last quarter. Of the remaining four banks, two said mortgage guidelines had “eased somewhat”, and the remaining banks said guidelines “tightened somewhat”.

It’s the second straight quarter in which fewer than 5 percent of banks tightened guidelines, and the first quarter in nearly 5 years in which the number of banks that loosened guidelines equaled the number of banks tightening them.

The easing in mortgage lending is a positive development for the housing market; and for buyers nationwide. Looser lending standards means that more buyers will be approved for home loans, and that should spur home sales forward across the region.

However, don’t confuse “looser standards” with “irresponsible standards”. It’s much more difficult to get financing today as compared to 2006. Delinquencies and defaults have altered how a bank reviews a loan application.

Today, underwriters are more conservative with respect to household income, total assets and overall credit scores. Even as compared to just 6 months ago:

• Minimum credit score requirements are higher
• Downpayment/equity requirements are larger
• Maximum allowable debt-to-income ratios are lower

If you can get approved, though, your reward is that mortgage rates are especially low. Since early-April, both conforming and FHA mortgage rates have been on a downward trajectory, and pricing is near a 6-month low.

Home affordability is at an all-time high, too.

Looser guidelines and lower rates should help fuel home demand through the summer months. If you’re in the market to buy, your timing appears to be excellent.

Memorial Day marks the unofficial start of summer, and most parts of the country are already feeling the heat. Temperatures reached record highs in more than 50 cities yesterday.

And, for homeowners with ceiling fans, the turn of season offers a simple way to lower your home’s energy bill, too. All it takes is the flick of a button.

Ceiling fans are designed to circulate the air in a room. During colder months, ceiling fans push warm air down from the ceiling, raising the temperature of a room. During warmer months, ceiling fans push cold air back into circulation, creating a windchill effect, of sorts.

This video from The Weather Channel explains how it works.

• When your heating system is on, rotate fan blades clockwise
• When your cooling system is on, rotate fan blades counter-clockwise

As compared to adjusting your home’s overall temperature in the summer, ceiling fans are economical and “green”. Using the equivalent amount of energy as 100-watt light bulb, a single ceiling fan can reduce a room’s effective temperature by 4 degrees. There’s similar benefits in the colder winter months, too.

If your home is without ceiling fans, they’re relatively inexpensive, and simple to install. There are tutorial videos online for the do-it-yourselfers, or you can call a qualified electrician for assistance. Need an electrician’s name and a reference? Call or email me — I’m happy to offer a referral.

Home affordability moved higher last quarter, buoyed by stable mortgage rates and falling home prices nationwide. The National Association of Home Builders reports that Q1 2011 Home Opportunity Index reached an all-time high for the second straight quarter last quarter.

Nearly 3 of 4 homes sold between January-March 2011 were affordable to households earning the national median income of $64,400. It’s the 9th straight quarter in which home affordability surpassed 70 percent, and the highest reading in more than 20 years of record-keeping.

From metropolitan area-to-metropolitan area, though, affordability varied.

In the Midwest, for example, affordability was high. 7 of the 10 most affordable markets were in the Midwest, including Kokomo, Indiana, in which 98.6% of homes were affordable to median income-earning families. Indianapolis, Indiana placed second for “big city” affordability.

The most affordable “big city” last quarter was Syracuse, New York. With a 94.5% affordability rate, Syracuse ranks 8th nationally in the Home Opportunity Index. It’s the second time that Syracuse placed first in the last 4 quarters.

Meanwhile, on the opposite end of home affordability, the “Least Affordable Major City” title went to the New York-White Plains, NY-Wayne, NJ area for the 12th consecutive quarter. Just 24.1 percent of homes were affordable to households earning the area median income, down more than 1 percent from the last reading.

Regardless of where you live, remember that rising mortgage rates can levy more pain on your household budget than can rising home values. And mortgage rates are expected to rise long before home prices do.

The rankings for all 225 metro areas are available for download on the NAHB website.

Home values dropped for the sixth straight month in March 2011, according to the Federal Home Finance Agency’s Home Price Index. The Home Price Index is a government-sponsored home value tracker.

The HPI report is the latest in a string of “falling home values” stories — a trend that’s troubling home sellers nationwide.

However, although the Home Price Index says home values are falling, that doesn’t necessarily mean that they are. Like most statistics in the housing sector, the Home Price Index is plagued by poor methodologies and a lack of timeliness.

In short, the Home Price Index is flawed. In three ways.

The first big flaw in the Home Price Index is that it only measures the values of homes with mortgages backed by Fannie Mae or Freddie Mac. Homes financed via FHA, or via other means are specifically excluded from the calculation. For today’s purchase market, that leaves more than 1 in 4 homes “uncounted” — a big percentage of the market.

Second, the Home Price Index determines home values by measuring price change from sale to subsequent sale. This eliminates new homes — a major market segment.

And, lastly, the Home Price Index reports on a 60-day delay; we’re only now seeing data from March. This two-month lag renders the HPI a trailing indicator for the housing market instead of a forward-looking one. If you’re a home buyer looking for market insight, the HPI can’t give it — it’s out-dated and out of season.

Despite its shortcomings, though, we can’t ignore the Home Price Index completely. It’s among the most thorough home valuation models available, and it’s used in public policy discussions. When the HPI says prices are down, Wall Street and Capitol Hill take notice, and that trickles down to everyday life on Main Street.

Since peaking in April 2007, the Home Price Index is off 19.1 percent.

Sales of newly-built homes surprised Wall Street, jumping 7 percent to an seasonally-adjusted, annualized 323,000 units last month.

In addition, the supply of new homes dropped to 6.5 months — a 2-month decrease from October 2010 and the best reading in a year.

The report runs counter to recent reports from the National Association of Homebuilders and the National Association of REALTORS® which suggest a looming housing slowdown. April’s New Home Sales report runs counter to that theory; it shows ongoing, steady, staggered improvement in terms of sales volume and sales inventory.

Broken-down by sales prices, the New Home Sales report also showed that homes are selling across all price tiers. The “luxury market” improved most:

• Up to $199,999 : +1,000 homes from March
• $200,000 to $399,999 : +2,000 homes from March
• $400,000 and over : +3,000 homes from March

These figures suggest that that move-up buyers — not first-timers — are driving the new home market. Homes under $200,000 now account for just 40% new home sales, down from 46% a year ago.

However, as with most months, it’s important that we recognize the New Home Sales data’s margin of error. Although New Home Sales showed a 7% improvement in April, the reported margin of error was ±17%. This means that the actual reading could have been as high as 24 percent, or as low as -10 percent. 

It’s a huge range, and because it encompasses both positive and negative values, the Census Bureau assigned its April reading “zero confidence”. It’s right there in the footnotes.

For home buyers , rising sales and falling supply may mean higher home prices. And, combined with the issuance of fewer building permits, supplies may be constrained into the summer months. This, too, would pressure home prices higher.

Mortgage rates across the state are near year-to-date lows, but locking them in this week may be difficult. As Memorial Day nears, and Wall Streeters get a head-start on the long weekends, trade volume in the mortgage bond markets will dip.

When bond volume drops, mortgage rates get jumpy. It’s a relationship based more on scarcity than actual market fundamentals.

It works like this:

1. Conforming and FHA mortgage rates are based on the “market price” of a mortgage-backed bond
2. Mortgage-backed bonds can’t be bought or sold without a buyer and a seller at a specific price

As Friday gets closer this week, and more and more Wall Street traders will leave for their “extended” 3-day weekend, and bond markets will be left with fewer and fewer participants. This will create a market situation in which it’s harder to match a buyer and seller at any given bond price, resulting in larger mortgage rate shifts than usual.

These jumps in rates are exaggerated during periods of economic uncertainty like these. What’s more, there’s a lot of economically-important data due for release this week. That, too, can put markets in hysterics.

If this were a “normal” week, mortgage rates would be volatile. The coming of Memorial Day is just adding to the mix.

Mortgage rates may rise this week, or they may fall.  Either way, if you have the opportunity to lock something favorable, consider doing it.  Rates are low and likely won’t last.

If you’ve spent time making your garden look great this spring, you’ll want to spend time helping it stay that way through the summer. This brief video will teach you how to keep your yard pest- and weed-free using eco-friendly products and nature, itself — all without the use of dangerous chemicals.

Some of the tips in the video include:

• Planting flowering nectar-bearing plants to attract “beneficial” insects
• Using electronic repellents and netting to keep pests away
• Adding a bird feeder to your yard

And, of course, you’ll want to use all-natural pesticides made from the extracted oils and fruits and spices which, when combined, keep weeds and bugs under control.

One thing to remember with respect to lawn care, though, is that ”organic” doesn’t always mean “greener”. Spot-application of a chemical-based product may best for your lawn’s particular needs, and you should consider using harsher, traditional pesticides when needed.

When in doubt, talk to a lawn care specialist.

The housing market recovery stalled last month. At least temporarily.

According to the National Association of REALTORS®, Existing Home Sales slipped 1 percent in April from the month prior, falling to 5.05 million units on a seasonally-adjusted, annualized basis. The reading is exactly in-line with report’s 6-month average which also reads 5.05 million units.

The data may appear “average”, but there’s another angle to consider. 

In April, as compared to March, the supply of existing homes for sales spiked. At the current pace of home sales, it would now take 9.2 months to exhaust today’s complete home inventory. This is almost one full month worse than March. It’s the worst home supply reading of the year.

There are also more homes “on the market” today than at any time since September 2010.

Other noteworthy statistics in the April Existing Home Sales report include:

• 31 percent of all homes sold in April were purchased with cash
• First-time home buyers bought 36 percent of all homes in April
• Distressed properties typically sold at a 20 percent discount

This “discount”, it should be noted, is a major reason why distressed properties accounted for 37 percent of the home resales in April. Home buyers are finding bargains when they’re willing to consider homes in various stages of foreclosure and short sale.

Overall, the April Existing Home Sales report represents opportunity for home buyers. Home sales are stagnant, supplies are rising and there’s no shortage of properties from which to choose. Furthermore, mortgage rates remain low.

If you’re considering a home purchase this fall, home supply may not be as ample, and financing conditions may not be as favorable, post-Labor Day. Talk to your real estate agent about what’s possible today. You may want to move up your time frame.

The Federal Reserve released its April 2011 Federal Open Market Committee meeting minutes Wednesday. In the hours since, mortgage markets have worsened; rates are higher by 1/8 percent this morning, at least.

The “Fed Minutes” is published 8 times annually, three week after each scheduled FOMC meeting. The minutes are the Federal Reserve’s official recap of the conversations and debates that shaped the prior FOMC session.

Another way to consider the Fed Minutes is as the companion piece to the more well-known FOMC press release. The press release is issued on the day of adjournment, and is brief, narrow, and high-level. The statement makes broad comments on the economy and outlines new monetary policy.

By contrast, the Fed Minutes is delayed, lengthy, and rife with details. The minutes highlights arguments and discussion points between Fed members, and digs deep into underlying economic issues.

The FOMC press release is measured in paragraphs. The Fed Minutes is measured in pages.

Here is some of what the Fed discussed last month:

• On inflation : Higher levels are “transitory”; will level-off with commodity prices
• On housing : The market remains depressed. “Vacant properties” are harming construction.
• On stimulus : The Fed will stick to its $600 billion support plan

In addition, at its meeting, the Federal Reserve discussed an exit strategy for its market support. The details are undecided, but the debate shows that the Fed is anticipated a change in policy sometime soon. 

Wall Street estimates that a gradual economic tightening will begin within 12 months.

Mortgage rates have been fading since mid-April. The Fed Minutes may be the catalyst of a reversal. The Federal Reserve expects growth in the U.S. economy and growth tends to boost stock markets at the expense of bonds.

As bond markets fall, mortgage rates rise.

Currently, Freddie Mac reports the average 30-year fixed mortgage rate as 4.63% — the lowest of the year.