Market Recap: Consumer Credit and Mortgage Apps Up, JOLTS Down Slightly
After some volatility earlier in the month, mortgage rates started to drop this week. Last week, the Federal Open Market Committee (FOMC) voted to leave interest rates unchanged. This week, the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) dropped slightly, and consumer credit posted modest gains. Mortgage applications also increased this week, following a drop last week.
The Labor Department’s JOLTS report showed little change from November to December. Job openings dropped from a seasonally adjusted 5.505 million to 5.501 million. The spread between openings and hirings is down to 249,000, one of the tightest differences of the past year compared to April’s 760,000. The FOMC looks closely at reports like JOLTS to determine the strength of the job market. December’s numbers suggest a strong demand for labor.
Consumer credit increased in December, but not at the expected rate. Revolving credit, such as monthly credit card use, was up $2.4 billion compared to November’s $11.8 billion increase. Nonrevolving credit, like student and auto loans, was up $11.8 billion. The composite index rose $14.2 billion, well under the projected $20 billion gain. Holiday spending was fairly subdued compared to previous years. For 2016, annual consumer credit is up 6.4%, down from 2015’s 7% rate.
For the week ending on 2/3, mortgage applications saw a composite increase of 2.3%, following last week’s decline. New purchase applications are up 2% and refinances are also up 2%. Even with the increase, refinance applications are at their lowest level since June 2009. Mortgage applications have experienced some volatility over the past month with the issuance and subsequent suspension of the FHA mortgage insurance premium cut.
In a speech on Monday, Federal Reserve Bank of Philadelphia President Patrick Harker said, “March is on the table” for the next interest rate hike. The FOMC considers jobs reports like JOLTS to evaluate the strength of the labor market as it pertains to the state of the economy. The FOMC is scheduled to meet again on March 14-15.
Sources: Mortgage News Daily, Business Insider, MarketWatch, Bloomberg, Bloomberg