2013 !! Time will tell. And as 2013 marches along, time will tell us what impact avoiding the Fiscal Cliff had on our economy...and if our labor market will continue to improve. Read on for details, and what they mean for home loan rates. On Friday, the Labor Department reported that 155,000 jobs were created in December, with 168,000 private job gains offset by modest government losses.

The Unemployment Rate was unchanged at 7.8% (November's 7.7% reading was subsequently revised higher). The Labor Force Participation Rate (LFPR) was also unchanged at 63.6%, which is still the lowest reading in over 31 years. The LFPR calculation is quite simple. If you are 16 years old and not in the military, then you either have a job or you don't. The ratio of people "participating" or working is then compared to the total population. All in all, the Jobs Report was in-line with expectations and shows that the labor market is continuing to improve, but at an anemic pace. The other big news from last week: The Fiscal Cliff was avoided after a last-minute deal was passed in Washington. The deal will shield millions of Americans from higher taxes and will extend Unemployment Benefits for the long-term unemployed. However, spending cuts were not addressed, which is something Congress will have to do over the next 60 days.

So what does this mean for home loan rates? Looking ahead, there is more uncertainty on the horizon as to how Congress will handle the debt ceiling, which is currently at $16.4 trillion and which must be raised in the coming weeks. There is also uncertainty after the Fed released the statement from their Federal Open Market Committee (FOMC) meeting in December, which revealed that some Fed members think the Fed should stop their latest rounds of Bond buying (known as Quantitative Easing) sooner than initially planned. While Bonds and home loan rates did worsen after hearing this news, the continued uncertainty here in the markets means that investors will likely continue to see our Bond market as a safe haven for their money. This could ultimately benefit Bonds--and home loan rates, which are tied to Mortgage Bonds--in the process. The bottom line is that now is a great time to consider a home purchase or refinance, as home loan rates remain near historic lows. Let me know if I can answer any questions at all for you or your clients.

Forecast for the Week : A light economic report calendar is ahead for the first full week of January. But with the markets watching to see how Congress continues to handle key items like the debt ceiling and spending cuts, we could see some volatility. oWeekly Initial Jobless Claims will be released as usual on Thursday. Now that the seasonal abnormalities are behind us, investors will be looking for the real numbers. Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. Mortgage Backed Securities (MBS), which are the type of Bond that home loan rates are based on. When you see these Bond prices moving higher, it means home loan rates are improving -- and when they are moving lower, home loan rates are getting worse. To go one step further -- a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes were on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning. As you can see in the chart below, Bonds and home loan rates worsened after the Fed minutes were released last week. I'll be watching all the news closely to see what happens this week.

Andrew Alfonso @ www.andrewalfonso.com 800 813 3291