Market Recap: Mortgage Apps Rebound, Job Openings Surge, Consumer Credit Slows
Mortgage rates trended downward this week. There were no major housing reports scheduled, aside from the weekly mortgage application survey. Job openings surged and consumer credit growth was sluggish. The labor market and consumer spending patterns influence the housing market. When consumers are gainfully employed and confident in the labor market, they are more inclined to spend and borrow.
The Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) showed a significant increase in job openings, with 6.044 million available positions in April, up 4.5% month-over-month. The news is somewhat surprising, in lieu of slow labor market growth. These metrics indicate that employers are struggling to find the right workers to fill positions. Additionally, high-paying jobs are getting harder to find. The majority of this report’s openings were in the food services industry and government positions.
The Mortgage Bankers Association (MBA) weekly application survey rebounded this week. New purchase applications increased sharply, up 10.0% after three weeks of declines. Refinance applications also increased, up 3.0%, for a composite increase of 7.1%. Earlier in May, mortgage rates dropped to year-long lows. These numbers indicate home buyers and homeowners are looking to lock rates before the expected rate hike next week.
Consumer credit measures total outstanding revolving and nonrevolving credit. Revolving credit accounts for monthly credit card payments and other bills. Nonrevolving credit includes longer-term debts like student loans and car payments. In April, consumer borrowing slowed to the smallest increase in the past six years. Total consumer credit increased $8.2 billion, for an annual growth rate of 2.6%. Revolving credit increased at an annual rate of 1.8% and nonrevolving credit rose 2.9%. This tepid growth is consistent with the decline in consumer spending.
Next week, the Federal Open Market Committee (FOMC) will meet on Tuesday and Wednesday. The Fed is largely expected to raise rates after this meeting. The market is pricing in a 90% chance of a rate hike.
Sources: Bloomberg, CNBC, Forbes, MarketWatch, Mortgage News Daily