Market Recap: More Job Openings, Mortgage Applications Mixed, Consumer Credit

Blog posted On February 09, 2018

Mortgage rates did not move significantly either way this week.  Most market volatility took place in the Stock Market sphere, when after months of record-setting highs the Dow Jones Industrial Average dropped the most points ever in a single day, and then proceeded to rebound the next day.  Job openings declined slightly, and the unemployment level remains historically low.  Refinance mortgage application submissions increased but new purchase applications were unchanged week-over-week.  Consumer credit expanded less significantly than it did the previous month. 

The Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) reports on changes in available job openings, hiring trends, and voluntary quits.  Though the data lags by one month, it is still used to gauge the health of the labor market.  In December, job openings scaled back to a level of 5.81 million from November’s 5.98 million.  The voluntary quit rate experienced a 3.1% gain reaching a level of 3.259 million, signaling that workers expect to find comparable employment if they choose to switch jobs.  Hiring is down slightly, to a level of 5.488 million, as employers struggle to find skilled workers to fill positions. 

The Mortgage Bankers Association (MBA) releases a weekly mortgage application survey to track changes in new purchase and refinance mortgage application submissions.  After declines last week, refinance applications improved, up 1.0% week-over-week.  New purchase applications were unchanged for a composite increase of 0.7%.  Mortgage rates have trended upward in recent weeks, following the end of year rate hike in December 2017, and expected additional rate hikes for the rest of the year.  Housing activity typically picks up heading into the Spring, but rising mortgage rates may influence sales.

Consumer credit is the total balance of outstanding credit segmented by revolving and nonrevolving debt.  Revolving debt includes monthly debt like credit card payments, and nonrevolving debt includes longer term debt like car loans and student loans.  Consumer borrowing strengthened in December but eased slightly from November’s pace.  Total consumer credit expanded at an annual growth rate of 5.8%, up $18.4 billion to a seasonally adjusted $3.84 trillion.  Revolving credit is up 6% month-over-month and nonrevolving credit is 5.7% month-over-month.  The growth suggests economic strength and easing of credit standards.  Some forecasters worry that Americans are taking on too much debt, as the national savings rate continues to fall, in December hitting the lowest level since 2005.

Mortgage rates are likely to continue to trend upward this year as they gradually react to the expected federal rate hikes.  While home prices have steadily appreciated, they are likely to cool slightly this year as construction activity picks up.  Strong consumer spending and a labor market near full employment are all indicative of another good year for housing. 

Sources: Bloomberg, CNBC, MarketWatch, Mortgage News Daily