Market Recap: Consumer Credit Expands, Job Openings Up, Mortgage Apps Mixed
Average mortgage rates did not move significantly this week, trending downward according to Mortgage News Daily. Both revolving and nonrevolving consumer borrowing increased. Job openings surged to a record high. New purchase applications were up but refinance applications were down.
Consumer credit tracks total outstanding consumer credit segmented by revolving and nonrevolving credit. Revolving credit counts monthly debt like credit card payments and nonrevolving credit tracks longer term debt like auto and student loans but excludes mortgage debt. In July, consumer borrowing increased by $16.6 billion at an annual growth rate of 5.1%. Revolving credit ticked up 1.5% month-over-month and nonrevolving credit jumped 6.4% month-over-month. Student loan borrowing may have triggered the increase, as college students prepare to go back to school. The modest gain suggests consumers are still exercising some degree of caution with their spending and living within their means.
The Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) tracks month-to-month changes in job openings, hirings, and voluntary quits. Though the data lags by one month, it is used to evaluate the health of the labor market. In July, job openings hit a record high of 6.94 million, up 1.7% from June’s 6.82 million openings. Hirings declined 1.2% month-over-month to a level of 5.679 million. Annually, openings are up 11.9% and hirings are only up 3.3% suggesting employers are having difficulty filling open positions.
The Mortgage Bankers Association (MBA) weekly mortgage application survey was mixed for the week ending 9/7. New purchase applications increased 1.0% and refinance applications decreased 6.0% for a composite decrease of 1.8%. Home buyer demand is expected to taper off into the fall and winter, usually the slower seasons.
Consumer spending and job growth are signs of economic strength, and thus housing market activity. The biggest challenge today’s home buyers face is lack of available homes for sale. Home buyers looking to make moves into the fall and winter should get preapproved for mortgage financing before making an offer. Mortgage preapproval shows sellers you are prepared to start the mortgage financing process and ensure a faster transaction.
Sources: CNBC, Econoday, MarketWatch, MarketWatch, MarketWatch, Mortgage News Daily