Saturday, August 12, 2017

Economic Data Remains Strong; Purchase and Refinance Applications Increase


The Stock Markets

It has been a while since any vulnerability to the rising stock indices has existed. Economic data continues to remain strong and shows little sign of weakening. Geopolitical concerns over North Korea’s nuclear capabilities have been taking center stage all week on the news channels and the concerns are starting to show up in investor decisions with more money flowing into the bond market.

Mortgage Bankers Association Loan Application Weekly Data

Purchase applications for home mortgages increased a seasonally adjusted 1.0 percent for the week ending August 4th. Applications for refinances jumped 5.0 percent with the recent slight decline in rates. As mentioned in the previous section, concerns on the international fronts have investors starting to remove money from stocks and placing funds in bonds as a hedge against market uncertainty.

The housing market continues to remain ahead of last year. From the same date a year ago, the purchase index is up by 7.0 percent. The refinance portion of mortgage financing increased by 1.2 percent to represent 46.7 percent of all mortgage financing. Mortgage rates for the week declined by 3 basis points, which appears to be enough to stimulate a few more refinances.

Job Openings and Labor Turnover Survey (JOLTS)

Once again it is clear that there is a significant shortage of qualified candidates to fill the job openings that currently exist. For the month of June job openings rose sharply to 6.163 million. This is up from the prior month’s 5.702 million. Hiring has been struggling as the filling of these available positions declined sharply by 103,000. Although this index can be quite volatile, the recent data points to significant tightness in the labor market. Additionally, despite all the job openings, the reduction in hires is an indicator that many employers want to fill open positions, but they remain against paying significant wage increases to attract the help.

Noteworthy News

The airline industry, which is not known for stellar customer service, is dipping it toes into the water of two-way texting with customers. Up until now, airlines only offered text communication one-way, from airline to passengers, typically related to gate change announcements and flight schedule changes or delays.

Hawaiian Airlines and Jetblue have begun a service (albeit it is in the testing phase) that allows passengers to communicate with customer service staff via text. Passengers can even complain via text. This should be interesting to see what happens in the coming months as the airline industry is notorious for not listening.

Next week’s potential market moving reports are:

· Tuesday August 15th – Housing Market Index
· Wednesday August 16th - MBA Mortgage Applications, Housing Starts, FOMC Minutes
· Thursday August 17th - First Time Jobless Claims, Industrial Production
· Friday August 18th – Consumer Sentiment

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 feel free to reach me at (707) 455-7070.

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