Loan Officer | NMLS #194146
Branch NMLS #1194581
Posted On September 15, 2017
Mortgage rates are starting to increase, after dropping to year-long lows earlier this month. Mortgage applications reacted with both new purchase and refinance submissions increasing significantly. Job openings increased again, but the labor market remains tight. The consumer price index exceeded expectations but inflation subdued.
The Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) reports on changes in job openings, hirings, and voluntary quits. In July, job openings increased strongly to a level of 6.170 million. Hirings are up to 5.501 million, 669,000 below openings, indicating a tight labor market. This month’s report shows that employers are hiring but struggling to find workers. This discrepancy could be due in part to sluggish wage growth and employers not matching workers’ salary expectations.
The low mortgage rates have led to a strong increase in both new purchase and refinance mortgage applications. The Mortgage Bankers Association (MBA) reports new purchase applications are up 11.0% and refinance applications are up 9.0% for a composite increase of 9.9%.
The consumer price index (CPI) improved 0.4% month-over-month and 1.9% year-over-year. The Core CPI less food and energy improved 0.2% month-over-month and 1.7% year-over-year. Notably, the cost of housing experienced the most significant monthly increase since 2005, driven by an increase in rents, bringing the segment up 0.5%. Gas prices are also up after damage to the Houston-area oil refineries.
The Federal Open Market Committee (FOMC) is scheduled to meet next Tuesday and Wednesday. While the labor market is strong, inflation is below the targeted rate and many fed officials believe further rate hikes are not warranted. The market is not expecting the Fed to raise rates at the next meeting.