The Bank of England increased their interest rates from 0.25 to 0.5% in anticipation of inflation increasing to 7.25% in April. Traders now anticipate rates will be 1.5% by November. They also voted not to reinvest any of the £875bn of government bonds they purchased during quantitative easing programs, further tightening the supply of funds.
Mortgage Rates – increased again this week as the price of Mortgage Backed Securities (MBS) declined. MBS maintained a downward velocity that has persisted for 6 weeks. Rates are up approximately 1% from this time last year.
Jobs – the Bureau of Labor Statistics reported 467,000 job creations in January which was triple expectations. The numbers for November and December wer also revised higher by a combined 700K. While the unemployment rate did tick up slightly there were 1.2M job creations. Weekly earnings were up slightly for the previous week and are up 5.7% year over year.
Home Values – increased by 1.3% in December of in 2021 and are up 18.5% (up from 18% in November) on a year over year basis – the highest reading in the 45-year history of the index. Their forecast for appreciation remains stubbornly low, 0% over the next month (they forecasted that for December) and only 3.5% year over year. Recently their forecasts have been unreliable.
Rents – Apartment List’s recent report showed rents rose by 0.2% in January and 18% year over year. Over the last 4 months rents have increased 4% so the pace of increase has clearly slowed.
Mortgage Applications – to purchase homes rose by 4% last week and are down 7% year over year. The number of cash transactions is up in that time period making the total amount of purchase volume down closer to 4%. Refinances increased 18% from the previous week after dropping 13% the prior week. They are down 50% year over year.