Every six weeks the Federal Reserve Board of Governors schedule a meeting. The purpose of the meeting is to announce their decision on short term interest rates. The governors can choose to increase interest rates, if they believe the economy is growing too fast, or lower them if the economy is growing too slow. Interest rates are a blunt tool, affecting every sector of the economy. The cost of your mortgage is directly related.

According to online lender Quicken Loans (quickenloans.com), the monthly Employment Report is extremely influential in fed rate decisions. When jobs are created too rapidly The Fed leans toward tightening. When jobs are created too slow The Fed leans toward lowering rates. A strong job market can cause the price of housing to rise in two ways.

When the unemployment rate is low the housing market tends to strengthen. High employment means low supply of skilled labor available for new jobs. This motivates employers to increase wages in order to get the jobs filled. In turn, higher wages can push home prices up.

If the Federal Reserve believes the labor market is too hot, they will be forced to raise interest rates. Rising interest rates make it more expensive to take out an adjustable rate mortgage, home equity loan or HELOC.

So there you have it: a strong job market can lead to home price appreciation as well as higher mortgage rates.

For more information on mortgage visit www.federalreserve.gov, www.quickenloans.com or www.bankrate.com.