Annual consumer inflation rose to the highest level in 40 years fueled by a spike in gas prices. The meteoric rise in prices was also due to the current supply chain shortage, a lack of workers along with big money flowing through the economy from Congress as well as the Federal Reserve. The Consumer Price Index rose 0.5% monthly in December down from 0.8% in November and just above the 0.4% expected. The annual headline number rose 7% annually, the highest since June 1982 but inline with expectations. The Core rate rose 0.6% monthly from 0.5% in November and above the 0.5% expected, up 5.5% annually, the highest since February of 1991. Gas prcies rose 50% annually.
Home borrowing costs jumped in the latest week but remain historically low. The MBA reports that the 30-year fixed-rate mortgage spiked by 19 basis points to 3.52% with 0.45 in points for the week ending January 7, 2022. Within the report it showed that the Market Composite Index rose 1.4, the Purchase Index was up 2% while the Refinance Index was essentially unchanged. An MBA spokesperson said, "The MBA expects solid growth in purchase activity this year, as demographic drivers and the strong economy support housing demand."
Good news from the housing sector as mortgage delinquency rates fell to pre-pandemic levels in October due in part to an improving labor market and higher home prices. CoreLogic reports that in October, 3.8% of mortgages were delinquent by at least 30 days, including foreclosure, near the 3.7% rate recorded in October 2019. In October of 2020, the delinquency rate was at 6.1%. Frank Martell, president and CEO of CoreLogic said, “We expect to see delinquency trend down over the balance of this year as the economy continues to rebound from the pandemic, employment grows and high levels of fiscal and monetary stimulus continues.”