Loan Officer | NMLS #91019
Branch NMLS #1627273
Posted On March 09, 2018
Mortgage rates are not moving much this week, leveling out after inching slightly upward. New purchase mortgage application submissions declined, but refinance application submissions improved. The ADP employment report strengthened again, as the job market nears full employment. Consumer credit expanded in January, but at a slower pace than in December, as expected.
The Mortgage Bankers Association (MBA) weekly mortgage application survey was mixed for the week ending on 3/2. New purchase applications declined 1.0% but refinance applications increased 2.0% for a composite increase of 0.3%. Upwardly trending rates have stalled some mortgage activity and pushed other potential buyers and refinancers looking to lock lower rates, to make their mortgage moves. MBA economist Joel Kan explained, “Rates inched higher overall last week driven by market concerns over potential US trade tariffs, and Fed Chairman Powell’s testimony outlining stronger economic growth and higher expected inflation in the near future.”
The ADP employment report was strong again in February, showing the addition of 235,000 jobs. Growth was driven by medium-sized businesses with the addition of 97,000 jobs, large companies added 70,000 jobs, and small firms added 68,000 jobs. Job growth is likely to continue to keep unemployment trending downward. In February, the unemployment rate slid slightly to a level of 4%, the lowest in over four decades.
In January, consumer borrowing slowed slightly after a robust holiday season. Total consumer credit expanded by $13.9 billion to a seasonally adjusted annual rate of $3.85 trillion. Nonrevolving credit including auto and student loans increased for the second straight month, up 5.6% month-over-month. Revolving credit scaled back, increasing only 0.8% month-over-month. Consumer borrowing typically slows after the holiday season, and though jobs are growing, they are low-end jobs not bolstering consumer income.
As the economy continues to strengthen, the Federal Reserve is likely to stay on track with raising interest rates this year. Mortgage rates still stand at historic lows and any increase will be gradual.