CCL Market Update: JOLTS Report, Consumer Sentiment, Mortgage Rates

The Labor Department released the results of their Job Openings and Labor Turnover Survey (JOLTS) for January last week. The last business day of January showed the number of job openings coming in at 4.998 million, up slightly from December’s 4.877 million. This is the highest number of job openings since 2001, bumping January’s job openings rate to 3.4%. Despite so many job openings, January hires decreased to 4.996 million from 5.239 million hires in December. There were 2.799 quits in January, up slightly from December’s 2.715 million, putting January’s quits rate at 2.0%.

Jobless claims for the week of March 7 fell by 36,000 to 289,000. This dropped the 4-week average down to 302,250 from the previous number of 306,000. Even though it decreased by 3,750, the 4-week average is still more than 10,000 above the average from a month ago.

So far this month, consumer sentiment has come in at 91.2 points. This has continued the downward trend from February’s 95.4 points and January’s 98.2 points, which had been the highest reading in nearly 8 years. This decrease is mirrored in the recent retail sales report, which detailed a 0.6% decrease in February, after a previous decrease of 0.8% in January. The solid job market has yet to elicit substantial consumer strength, and the steady increase of gas prices seems to be discouraging significant consumer spending in other areas.

The two-day Federal Open Market Committee meeting begins on Tuesday and concludes with a policy announcement on Wednesday. Traders will watch for the Fed’s continued use or removal of the word “patience” from the policy statement as an indication of the timing of future interest rate increases. If patience is, in fact, removed from the policy statement, rates could rise quickly and immediately.

Mortgage Rates

As job growth continues to gain momentum, mortgage rates are rising bit-by-bit. According to Freddie Mac’s weekly Primary Mortgage Market Survey, 30-year conventional mortgage rates are at 3.86% on average this week, up from 3.75% last week. This jump of 11 basis points (0.11%) is the biggest one-week increase in mortgage rates since December 2013. National rates for other loan types, including FHA, USDA and VA loans, all worsened by approximately 1/8 percent-point.

Thankfully, rates here on the Central Coast remain lower than Freddie Mac’s national survey numbers. Conventional loan programs all saw a small bump in rates this week except for the 15-year fixed. The 30-year fixed displayed the largest increase, going from 3.750% (3.793% APR) to 3.875 (3.915% APR), an increase of about 1/8 percent-point. Conversely, all government loan programs, with the exception of the 30-year FHA, decreased very slightly over the last week, down by about 0.003% APR to 0.004% APR.

Daniel Podesto, co-owner of Central Coast Lending, remarked on the rising rates, “With such a strong February employment report following three months of strong job gains, the general sentiment is that the Fed will raise rates sooner than later, and the markets are getting ahead of that.”
Before rates go much higher, give us a call at 805.543.LOAN to get a free personalized rate quote for your home purchase or refinance.