Blog posted On November 04, 2019
Last week, the Federal Open Market Committee (FOMC) voted in favor of a rate cut and mortgage rates reacted by trending lower. This week, the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) is scheduled for release on Tuesday and the consumer credit report comes out on Thursday. The only significant housing report will be the Mortgage Bankers Association (MBA) weekly mortgage application survey on Wednesday.
The JOLTS report tracks month-to-month changes in job openings, hiring, and voluntary quits. In August, job openings declined for the third straight month down to a level of 7.05 million. The quits rate also declined, down to 2.6%. In a strong labor market, workers are confident they will find comparable employment if they choose to quit their job. With the unemployment rate still near an all-time low, the labor market is still showing signs of strength.
The MBA weekly mortgage application survey reports week-to-week changes in the filing of new purchase and refinance mortgage application submissions. For the week ending 10/25, new purchase application submissions increased 2.0% and refinance application submissions decreased 1.0% for a composite increase of 0.6%. According to Joel Kan, the MBA’s associate vice president of economic and industry forecasting, the data suggests mortgage momentum is building. He stated, “considering how much lower rates are compared to the end of 2018, purchase applications should continue showing solid year-over-year gains.”
Consumer credit tracks changes in the total amount of outstanding consumer credit, divided by revolving and nonrevolving credit. Revolving credit includes short-term debt like monthly credit card debt and nonrevolving credit includes longer-term debt like car loans and student loans but not mortgage debt. In August, total consumer credit expanded by $17.9 million at an annual growth rate of 5.2%. Weaker credit card spending constricted growth, as revolving credit fell 2.2% in August. Nonrevolving credit, however, increased 7.8% in August.
Lower mortgage rates along with a slowdown in home price appreciation signal a positive housing market ahead. Buyers who are looking to purchase in the upcoming months should get preapproved for mortgage financing before they start shopping. Mortgage preapproval will help you stand out to home sellers and show them you have already started the financing process.