Blog posted On January 10, 2020
Mortgage rates did not move significantly this week, still historically low. New purchase mortgage application submissions increased, and refinance application submissions declined. The ADP employment report added more jobs than expected. Revolving consumer credit declined but non-revolving consumer credit increased.
The Mortgage Bankers Association (MBA) weekly mortgage application survey returned mixed results for the week ending 1/3. New purchase mortgage application submissions increased 5.0% and refinance application submissions decreased 8.0% for a composite decrease of 1.5%. The data suggests home buying activity will continue to pick up, but refinance activity will slow down. MBA chief economist Mike Fratantoni said, “Homeowners would need to see a sharp drop in rates to reinvigorate the refinance wave seen in 2019.”
The ADP employment report exceeded expectations in December, adding a significant 202,000 jobs. After November’s modest growth of 67,000 jobs, job growth has increased. Small businesses added 69,000 jobs, mid-size companies added 88,000 jobs, and large firms added 45,000 jobs.
Consumer credit growth decelerated in November at an annual growth rate of 3.6% compared to October’s growth rate of 5.5%. Revolving credit, like credit card debt, declined 2.7%, but non-revolving credit increased 5.8%. The decline was likely driven by slower consumer spending, which is somewhat surprising since the data includes the start of holiday spending season.
Many housing professionals are expecting an early home buying season this year, especially with historically low mortgage rates. If you plan on buying a home this year, get preapproved for mortgage financing before you start shopping. Mortgage preapproval shows the seller you’ve already started the financing process and will be ready to meet a deadline if they accept your offer.