Wages increased for most workers, and that's good news for the mortgage industry.

Wages for U.S. workers grew 3.5 percent over the last year, increasing the average wage level by $0.95 to $27.81 an hour, according to the Workforce Vitality Report from the ADP Research Institute.

The growth, accelerating to 3.5 percent annual as of September 2018, was driven by strong wage gains for workers in the professional and business services industry, representing almost 17 percent of the workforce, (3.5 percent wage growth, $35.23 average hourly wage) and trade, representing 22 percent of the workforce, (3.9 percent wage growth, $24.57 average hourly wage).

The West (4.3 percent, $29.88) and large businesses (4.8 percent, $28.84) also contributed.  Employees in the resources and mining industry saw their wages decrease (-0.2 percent, $34.91) and businesses with less than 50 employees experienced the slowest wage growth (2.0 percent, $25.56).

"Full employment is upon us," said Ahu Yildirmaz, co-head of the ADP Research Institute.  "This is evident in the gradual slowdown we've seen in overall job switching for the past year, coupled with an acceleration in wage growth for switchers.  As the labor market tightened, employers focused on providing the pay and benefits that would attract and retain skilled talent, making job holders less apt to switch."

Among industries, information continued to lead the way for both wage level and wage growth. In addition to the top overall wage growth number of 6.2 percent, those who successfully switched positions to the information industry had wage growth of 9.8 percent.  Employment in the information industry improved to 2.1 percent.

Job switchers in professional and business services and construction also realized high wage growth of 9.4 and 7.5 percent, respectively. In trade, the largest sector, job holders experienced stronger growth in wages than the workers who switched to the industry, 5.2 percent versus 3.8 percent.

Table 1: Wage and Employment Growth by Industry – September 2018

Workers in the West outpaced other regions with 4.3 percent wage growth and 2.6 percent employment growth. Job switchers also fared best in the West experiencing a wage growth of 8.7 percent. Workers in the South had the lowest wage growth at 2.8 percent and Midwest had the worst employment growth at 1.1 percent. By firm size, workers at large firms had the highest wage growth rate at 4.8 percent, with employment growth at 2.4 percent.

Table 2: Wage and Employment Growth by Region and Firm Size – September 2018

Also, the research revealed that more than 20.9 percent of U.S. employees successfully switched firms in the last year. This highlights an overall slowdown in job switching.  On the other hand, we have seen wage growth for job switchers gradually accelerating during this same time period, currently at 5.6 percent. Given that the U.S. labor market is at full employment, and there is a shortage of skilled labor, this is not surprising as employers look to attract and retain top talent with premium wages.

Lake Michigan Credit Union has completed the implementation of MSP, the loan servicing system from Black Knight. The solution encompasses all aspects of servicing--from loan boarding to when the loan is paid off--for first mortgages and home equity loans and lines of credit. MSP is used to service 34 million active loans and was designed to increase  efficiency, reduce costs and improve risk mitigation.

Also, Lake Michigan Credit Union has deployed Black Knight's Actionable Intelligence Platform to provide proactive intelligence that will benefit its servicing operation. The Platform delivers strategic, proactive and actionable analytics to the right people, across an organization at the right time, so they know what action to take next. For instance, an app makes it easy for members to check their mortgage balances.

"Our servicing portfolio has grown to $11 billion and 55,000 members, we want to retain servicing rights, so we thought it was time to upgrade to a more robust system,” said Eric Burgoon, chief lending officer of Lake Michigan Credit Union. “We made this decision because we wanted to stay on top of regulatory changes as well as automated features that allow us to send notices to members, for instance, on a specific date, so we never miss a date.”

"We are excited that Lake Michigan Credit Union has selected Black Knight to support its growing business. As a leading mortgage software provider, we've made significant investments to further innovate our servicing system, which offers our clients many compelling advantages to optimize their servicing operations and mitigate risk," said Joe Nackashi, president Lake Michigan Credit Union. "Integrating Black Knight's comprehensive analytics with our MSP technology will help Lake Michigan Credit Union prepare its business for the future of the mortgage industry."

The rise in mortgage rates has forced borrowers into less expensive homes—as purchasing power drops.

A homebuyer with a monthly housing budget of $2,500 a month and a 20 percent down payment could afford to purchase a home for as much as $473,750 at the beginning of the year when 30-year mortgage rates were averaging around 4 percent. Now that rates have climbed above 4.75 percent, that same buyer can only afford a home priced up to $444,000—a loss of $29,750 in purchasing power, according to a Redfin analysis.

Home prices in some of the hottest markets have been inching down over last few months. Prices are still higher than they were a year ago, but price growth is slowing in the coastal markets where homes are sitting on the market longer, more homes are available to choose from, and more sellers are dropping their prices.

"Every fall and winter we see prices decline relative to spring and summer, but this year's seasonal declines have been more extreme as buyers, especially in coastal markets, are finally reaching a limit in terms of how much they are willing to pay," said Redfin chief economist Daryl Fairweather. "Sellers haven't quite come to terms with the fact that they no longer have buyers wrapped around their finger. This push and pull is likely to continue until early 2019 when the home-buying season picks back up."

For those weighing whether to buy a home now before mortgage rates tick up further, or wait for seasonal price declines, Redfin published the attached chart showing how purchasing power changes as mortgage rates rise, on several different monthly housing budgets.

Rates are expected to continue rising through into 2019, which will have a direct effect on the number of homes that are affordable to buyers.

For instance, a borrower who’s looking for a three-bedroom, two-bathroom home. If his monthly house payment budget is $3,500, an increase in mortgage rates from 5.0 percent to 5.5 percent would reduce the number of homes for sale that you could afford by more than 15 percent in Orange County, Calif., Honolulu, or San Jose. In Boston, Seattle, Los Angeles, or San Diego, your selection shrinks by 10 to 14 percent.

Table: Number of Affordable 3-bed, 2-bath Homes For Sale at $3,500 Mortgage Payment

[For this table, Redfin used the relatively high monthly mortgage payment of $3,500, which is enough to purchase a home around the median price in many coastal markets. The data show that even with a budget this high, the selection of homes for sale can be dramatically affected by rising rates.]

With a monthly housing budget of $2,500, if rates rise to 5.5 percent, the number of listings on the market that a buyer can afford decreases by 10 to 20 percent in Sacramento, Long Island, Denver, and Portland, Oregon.

If prices actually fall next year (which is not currently expected in most markets), falling prices could offset the cost of rising mortgage rates. However, the bigger a borrower's budget, the bigger home price drops needed to see in order to balance out increasing mortgage rates. For example, if a budget is $2,500 a month, a borrower would need to pay $18,000 less for the home to offset a rate increase to 5.5 percent from 5 percent. If the budget is  $3,500 a month, the home price needs to be $25,250 less to keep the borrower's payment the same.