Monday Market Forecast: MBA Applications, Consumer Credit, and the Fed’s Balance Sheet

Blog posted On December 05, 2016

Mortgage rates went up last week, but are still hovering historic lows.  This week’s reports include MBA mortgage applications, consumer credit, and the Fed’s balance sheet.

Mortgage purchase applications have stalled amid holiday sales slowdown.  Last week applications posted sluggish gains and refinances continued to fall.  Numbers may pick up this week, with borrower’s looking to lock ahead of the potential rate hike. 

Consumer credit measures the dollar value of credit outstanding.  Healthy growth in consumer credit can be positive as borrowing is associated with purchasing which stimulates the economy.  It can also be negative if too much debt is taken on by the borrowers.  The demand for credit also impacts interest rates, so this figure is important to review ahead of this month’s FOMC meeting.

The Fed’s balance sheet is a report that details the “factors affecting reserve balances.”  Since 2008, investors have watched the Fed’s balance sheet since it became more complex in the wake of the financial crisis when the rate was cut to an essential zero.  Markets focus on economic supply reserve changes, controlled by the Federal Reserve. 

The housing market tends to slow down in the winter months amidst holiday travels.  Forecasters are predicting 2017 to be a big year for housing, last month brought surges in existing home sales and housing starts. Even with an interest rate hike on the horizon, mortgage rates are at historic lows. 

Sources: Mortgage News Daily, MarketWatch, Bloomberg