|For the Week Ending February 16, 2018|
The Stock Market:
It seems as if the stock market panic has subsided. With calmer heads prevailing and the reality check that virtually every piece of recent economic data pointing to a strong economy, investors have returned to buying stocks. Through Thursday of this week the stock market is up 827 points, with the indices set to open slightly higher on Friday.
One of the other drivers of investor fear has been the belief that inflation is heading higher rapidly. This week’s long-awaited inflation report, confirmed that inflation is increasing, but not nearly at the level in which investors were expecting.
Inflation on the wholesale level rose 0.4 percent, which was on target with expectations. Although this increase is higher than we have seen for some time, it is in no way showing a rapid rise in prices that many had feared.
Prices on the retail level, as indicated by the latest report in the Consumer Price Index, showed a slightly hire than expected increase of 0.5 percent. However, despite this increase, overall inflation, compared to the same time last year, is only up 2.1 percent. This reinforces the fact that significant upward pressure on prices is still difficult to see.
It was to be expected. With mortgage rates rising, combined with last weeks chaos on Wall Street, sooner or later this would show up in the mortgage application data. Applications for purchase loans declined by 6.0 percent, while refinances declined by 2.0 percent. Given the volatility in the market, these declines are actually less than most experts anticipated. The spread between application activity from the same time last year has narrowed to only 4.0 percent.
Housing ended 2017 on the upswing and is continuing to show great strength kicking off 2018. Housing starts in January jumped to the second highest level since the recession at an annualized rate of 1.326 million. This represents an almost 10 percent increase, when analysts were only expecting a rise of about 2.0 percent.
Next week’s potential market moving reports are:
• Monday February 19th – Presidents Day – All Markets Closed
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.
|Consumer prices rose more than expected in January, fueling fears that inflation is moving higher. Rising inflation will continue to pressure mortgage rates
|The labor market is still showing strength, with jobless claims remaining below the 300,000 threshold. Wages are also showing signs of increasing.|
|Rising inflation and the strong labor market have economists thinking the Fed may actually raise policy rates 4 times this year instead of 3.|
|Higher rates are affecting mortgage applications, which were down 4.1% overall last week. Purchase applications were still 4% higher than last year though.|
|Two-thirds of home buyers said they searched 3+ months before going under contract. Twenty-seven percent said they were outbid by another buyer.|
|In a recent survey, only 6% of home shoppers said they would stop their current home search if mortgage rates were to rise above 5%. Not too bad.|
My wife called me lazy and said I’d better have something planned for Valentine’s Day. I said, “Yes, I was thinking of taking the Christmas
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
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