Market Forecast: Job Openings, Mortgage Applications, and Consumer Credit

Blog posted On February 05, 2018

Mortgage rates did not move much last week, after the Federal Open Market Committee voted to leave interest rates unchanged.  This week, there will be no significant housing reports other than the Mortgage Bankers Association (MBA) weekly mortgage application survey.  The Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) comes out on Tuesday and consumer credit comes out on Wednesday.  Though they are not housing specific reports, labor market and consumer spending activity spur economic momentum and impact housing.

The JOLTS report shows monthly changes in job openings, hirings, and voluntary quits.  In a strong labor market, workers are confident that they will find similar employment if they choose to leave their job.  With unemployment at a four-decade low, the labor market is nearing full employment.  Employers are struggling to find skilled workers to fill open positions.  In November, there were 5.879 million job openings.

The MBA mortgage application survey tracks weekly changes in mortgage application submissions.  After a strong couple of weeks, both new purchase and refinance applications declined 3.0%, for a composite decrease of 2.6%.  As mortgage rates continue to rise and home prices appreciate, the housing market is becoming increasingly competitive.

Consumer credit is a total measure of outstanding credit segmented by revolving and nonrevolving credit.  Revolving credit includes monthly debt, like credit card bills, and nonrevolving credit includes long-term debt like student loans and auto loans.  Steady growth in consumer borrowing signals consumers are confident and willing to take on debt they can repay.  Too much consumer borrowing can be a sign of trouble ahead, because wage growth has not caught up with price increases.  

Consumer spending activity has strengthened and based on the consumer confidence and consumer sentiment indexes, most taxpayers are optimistic about recent tax cuts.  However, inflation continues to fall below the Federal Reserve’s target rate.  As the economy continues to strengthen into 2018 more rate hikes are expected and mortgage rates will follow the trend. 

Sources: Bloomberg, MarketWatch, Mortgage News Daily