Market Recap: Job Openings Decline, Consumer Credit Up, Mortgage Apps Rebound
The US government is still in a state of partial shutdown, delaying the release of some economic indicators. Mortgage rates have recently trended downward, resulting in a spike in mortgage application submissions. The Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) showed the number of job openings have declined. Consumer credit expanded to a total outstanding debt of $3.98 trillion.
The JOLTS report details monthly changes in job openings, hiring, and voluntary quits. After hitting a record high of 7.29 million in August, job openings have steadily declined, down to a level of 6.89 million in November, indicating a tight labor market. Despite the drop, the unemployment rate continues to hover around a 49-year low. The voluntary quits rate ticked lower to a rate of 2.5% and although companies are still hiring, they have difficulty locating skilled workers to fill open positions.
Total consumer credit expanded in November by $22.1 billion to a seasonally adjusted $3.98 trillion. Revolving credit, like credit card borrowing, slowed down slightly up 5.5% month-over-month after October’s 10.9% gain. Nonrevolving credit, like auto loans and student loans excluding mortgage debt, is up 7.1% month-over-month after October’s 6.5% gain. The business-as-usual consumer credit report is supportive of positive economic growth.
The Mortgage Bankers Association (MBA) weekly mortgage application survey increased substantially for the week ending 1/4, new purchase applications increased 17% week-over-week and refinance applications increased 35% week-over-week, for a composite increase of 23.5%. A gradual drop in mortgage rates during the month of December led to a sharp increase in mortgage application submissions. MBA’s associate vice president of economic and industry forecasting commented, “mortgage rates fell across the board last week and applications rebounded sharply […] this drop in rates spurred a flurry of refinance activity – particularly for borrowers with larger loans.”
The US government remains partially shutdown over a spending dispute. While the shutdown has delayed the release of some economic indicators like the new home sales report and US construction spending, the overall impact on loan programs has been minimal. Broken down by loan types, the shutdown has had minimal to no impact on conventional loans with Fannie Mae and Freddie Mac, FHA loans, or VA loan. The USDA will not issue any new guarantees on USDA loans during the shutdown with conditional commitments cannot be guaranteed until the shutdown has ended. If you have any specific questions about the government shutdown and your mortgage, please let me know.
Sources: CNBC, Econoday, MarketWatch, MarketWatch, MarketWatch