Mortgage Lending Contracts Sharply

By Dow Jones Business News, 
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Mortgage lending declined to its lowest level in 14 years in the first quarter as homeowners pulled back sharply from refinancing and house hunters showed little appetite for new loans, the latest sign of how rising interest rates have dented the housing recovery.

Lenders originated $235 billion in mortgage loans during the January-March quarter, down 58% from the year-earlier period and down 23% from the fourth quarter of 2013, according to industry newsletter Inside Mortgage Finance.

The mortgage market is experiencing its largest shift in more than a decade as an era of generally falling interest rates that began in 2000 appears to have run its course. The average 30-year fixed-rate mortgage stood at 4.5% last week, up from 3.6% last May, when interest rates shot up in reaction to the Federal Reserve's initial indication that it might reduce a bond-buying campaign aimed partly at keeping a lid on long-term rates like mortgages.

The decline in mortgage lending last quarter stemmed almost entirely from the slide in refinancing. Loans for home purchases were basically flat from a year earlier and down from the fourth quarter.

The lending news could disappoint economists expecting a pickup in housing construction and new-home sales to drive growth. Other sectors of the economy show signs of rebounding after a winter lull.

A soft housing market could also complicate the Fed's efforts to dial back easy-money policies designed to support recovery. Applications for purchase mortgages recently ran nearly 18% below year-earlier levels, even as the average loan amount on new applications hit a record $280,500, according to the Mortgage Bankers Association.

Nick Timiraos The Wall Street Journal Fewer High-School Grads Are Enrolling in College

Fewer high-school graduates are enrolling in college following the recession, according to the Labor Department.

Of the nearly three million people between ages 16 and 24 who graduated from high school between January and October last year, 1.96 million, or 65.9%, were enrolled in college in October. That's the lowest rate in a decade and down from 66.2% the prior year, the agency said.

The Labor Department's figures come as a separate report found that more people are earning postsecondary degrees. By 2025, 60% of Americans will hold a degree, certificate or other postsecondary credential, according to the annual Lumina Foundation's "A Stronger Nation" report.

The Labor Department also reported that fewer college students are juggling jobs with their studies. In October, 34.1% of college students were working or looking for a job, the lowest figure in at least two decades. In 2012, just over 38% had a job or wanted one.

Recent high-school grads not in college were nearly twice as likely to be working or looking for a job. That figure stood at 74.2% in October 2013, compared with 69.6% in 2012.

Sarah Portlock Real Time Economics blog WSJ.com Economists Expect an Increase in Hiring

Business economists' outlook for near-term hiring strengthened this spring to the highest mark in nearly three years, a new survey found.

The poll by the National Association for Business Economics said 43% of corporate economists expect hiring by their firm or industry to increase in the next six months--the most optimistic forecast since July 2011. The latest poll found that only 8% of economists expect businesses to cut payrolls over the next two quarters.

A projected increase in hiring raises the prospect that the unemployment rate could inch down toward its historical average this year. The unemployment rate--6.7% in March--has fallen more than a percentage point since the start of 2013, but remains above the 5.8% it has averaged since 1948.

Two-thirds of economists in the "goods-producing" segment, which includes manufacturers, said hiring will increase. But only 30% of service-sector firms expect the same. Manufacturing jobs tend to pay higher wages than service jobs, so increased manufacturing hiring could support growth in incomes and consumer spending.

Still, the latest projections come with a familiar warning: Past predictions of an around-the-corner economic breakout have largely failed to materialize since the recovery began nearly five years ago.

During the six months following the previous peak in hiring optimism in July 2011, the pace of payroll gains slowed slightly compared with the first half of that year.

Eric Morath Real Time Economics blog WSJ.com Amazon Tests Deliveries

Amazon.com is testing its own delivery network for "the last mile"--the final leg of a package's journey to a consumer's doorstep. Trucks loaded with Amazon packages and driven by Amazon-supervised contractors are delivering packages in San Francisco, Los Angeles and New York.

Self-delivery would give Amazon, stung by shipping delays last Christmas, more control over the shopping experience. The retailer will gain flexibility regarding when packages are delivered and help in containing shipping expenses, which grew 29% last year. As a percentage of sales, Amazon's shipping costs have grown each year since 2009, securities filings show.

Just as important, the new delivery efforts will get Amazon closer to a holy grail of e-commerce: delivering goods the same day they are purchased, offering shoppers one less reason to go to physical stores. With its own trucks, Amazon could offer deliveries late at night, or at more specific times.

Amazon's move is a shot across the bow of United Parcel Service, FedEx and the U.S. Postal Service, which now deliver most Amazon packages. It is also challenges rival Wal-Mart Stores, eBay and Google, each of which is testing deliveries.

Ultimately, a delivery network could transform Amazon from an online retailer into a full-service logistics company that delivers packages for others, according to former Amazon executives. They caution that any such effort likely is years away.

Delivery is a big step in Amazon's seemingly limitless ambition. Not content to be the world's largest Internet retailer, Amazon has branched into original video programming, set-top boxes for streaming video, and soon, smartphones, among other things.

Greg Bensinger And Laura Stevens WSJ.com


  (END) Dow Jones Newswires
  04-26-142035ET
  Copyright (c) 2014 Dow Jones & Company, Inc.


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