Americans across the nation took advantage of the recent drop in home loan rates as mortgage application activity surged in the latest week. The Mortgage Bankers Association reported that its Market Composite Index, a measure of loan application volume, rose by 6.4% for the week ended October 25. The refinance index jumped 8.7% while the purchase index was up 2.3%.
The regularly scheduled two-day Federal Open Market Committee meeting will end this afternoon with the monetary policy statement being released at 2:00pm ET. There will be no change in the Federal Funds Rate, which is currently at 0.25%. The Federal Funds Rate is the rate at which depository institutions lends funds maintained at the Federal Reserve to another depository institution overnight. The Fed’s current Quantitative Easing program, dubbed “QE III”, will continue into 2014 where the Fed is purchasing $85 billion per month in Mortgage Backed and Treasury Securities in an effort to promote job and economic growth.
In economic news, the Labor Department reported the delayed September Consumer Price Index (CPI) today, rising by 0.2%, due in part to higher medical care costs, shelter and energy costs. The 0.2% was above the 0.1% expected and up from 0.1% in August. When stripping out volatile food and energy, the Core CPI was unchanged at 0.1%, inline with estimates.
On the labor front, ADP reported today that private employers added 130,000 workers in October, above the 125,000 expected, but down from the 145K in September, which was revised lower from 166,000. This was slowest private job creation in six months. Over the last three months, there have been an average of 142,000 private jobs created.