|For the Week Ending January 12, 2018|
The Stock Market and the Economy:
The stock market continues to soar to the stars. Another week, and more record highs. The driving force behind the Dow’s rocket ship climb is the expectation of tremendous growth in corporate earnings. The economy as a whole is doing extremely well. We are essentially at full employment in the United States. There are numerous strong economic data reports that have been coming out. Inflation remains low while interest rates are also low. Major corporations are showing strong profits.
Now add on top of all this the fact that corporate taxes are dropping from 39% to 21%. This sets the stage for huge corporate profits and business growth. As much as there has been much criticism regarding the change in tax policy, more and more companies are announcing that they are giving some of the tax reduction windfall back to their employees. Albeit in most cases, what is being paid out to employees is not significant in comparison to the savings the companies will receive, it is still more money going to consumers that will bolster the economy further.
Job Openings and Labor Turnover Report:
Despite the fact that the number of job openings has declined slightly from the highs of July, there is still clearly a labor shortage. New hiring continues to remain strong at or near the all-time high that was set in October at 5.592 million.
Workers and employers however are remaining risk adverse. The number of people leaving their current jobs declined by 0.9 percent in November. Even though there are plenty of job openings, it appears that workers seem to be more comfortable and secure remaining where they are versus seeking higher pay.
Mortgage Application Activity:
Despite mortgage rates rising in the first week of the year, home loan activity for both purchases and refinances continues to point to a strong housing market. For the week ending January 5th, applications for refinancing unexpectedly jumped by 11.00 percent. For the same period mortgage apps for purchasing increased by 5.0 percent. Refinance applications still represent approximately 52 percent of mortgage loan activity.
Next week’s potential market moving reports are:
• Monday January 15th – Martin Luther King Jr. Day
As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends. I welcome the opportunity to serve you in any way I possibly can.
Please enjoy this quick update on what happened this week in the housing and financial markets.
|Producer prices fell for the first time in nearly 1-1/2 years in December. This could temper expectations that inflation will accelerate in 2018.|
|Unemployment benefit claims increased for the 4th straight week, to a 3-month high. Likely due to weather, the change doesn’t signal weakness in the labor
|The implemented tax reform is already being credited for increased economic growth. Multiple companies are reported to be passing savings on to workers.|
|CORRECTION FROM LAST WEEK: The final tax reform plan does
not allow taxpayers to deduct interest for either new or existing home equity loans. We apologize for the error.
|Mortgage applications on newly constructed homes rose 18% in December from the previous month. The applications were 7.8% higher than December 2016.|
|The seller of a 9,000-sq-ft mansion in Malibu is willing to accept bitcoin as part of the payment. The volatile cryptocurrency is not usually used for home
|Home equity has hit a new record high, reported to be $5.5 trillion. Remodeling spending topped $152 billion in 2017 and is forecast to increase in 2018.|
How long have I been working for this company? Ever since they threatened to fire me.
Rate movements and volatility are based on published, aggregate national averages and measured from the previous to the most recent midweek daily reporting period. These
American Family Funding
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