Loan Officer | NMLS #1166673
Branch NMLS #1711540
Posted On December 08, 2017
Mortgage rates trended slightly downward this week ahead of next week’s Federal Open Market Committee (FOMC) meeting. On Saturday, the Senate approved their version of the tax reform bill. Both new purchase and refinance mortgage applications increased. The ADP employment report increased, but slightly less than last month. Consumer credit expanded to one of the highest levels all year.
For the week ending 12/1, the Mortgage Bankers Association’s (MBA) weekly mortgage application survey turned around, with increases in both new purchase and refinance applications. New purchase applications were unchanged at a rate of 2%, and refinance applications improved 9% after last week’s 8% decline. The composite index increased 4.7%. Mortgage rates did not change drastically this week, and many home buyers and homeowners may be looking to lock rates before the expected rate hike later this month.
The ADP employment report showed the addition of 190,000 private-sector jobs in November. Small businesses added 50,000 jobs, midsize businesses added 99,000, and large businesses added 41,000. Gains were driven by the service sector, followed by manufacturing. Moody’s Analytics chief economist Marky Zandi predicted, “we are very likely to have a sub-4% unemployment rate as we move into 2018.”
Consumer credit expanded in October, the highest level in 11 months. Total consumer increased 6.5% year-over-year to a level of $20.5 billion. Revolving credit, like credit card borrowing, increased 9.9% in October, up from September’s 7.3% gain. Non-revolving credit, like car and student loans, increased at a rate of 5.3%, down slightly from September’s 5.7% gain. The boost in revolving credit could be attributed to holiday shopping.
Tax reform was one of the most discussed topics in the financial world this week. The House of Representatives and the Senate will go to conference on their respective tax reform bills to try and create one version to send to President Trump. With low unemployment, and inflation nearing the Fed’s target rate, the FOMC is expected to raise interest rates next week, after its final meeting of the year.