Market Recap: Consumer Credit Expands, Job Openings Increase, Mortgage Apps Improve
Mortgage rates trended slightly downward this week. Consumer credit expanded more modestly than the previous month. Job openings surged to a record high. Mortgage applications improved after declining last week.
In June, consumer credit expanded less rapidly, as borrowing slowed. Total consumer credit increased $12.4 billion for an annual growth rate of 3.9%. Overall, consumer borrowing has slowed in the second quarter, with June’s number coming in almost $4 billion lower than expected. Specifically, nonrevolving credit slowed, with student and auto loan borrowing up 4.9% year-over-year in June, compared to 8.2% year-over-year in May. Consumer spending accounts for two-thirds of economic activity so economists track this figure closely to evaluate spending and borrowing habits.
The Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) showed the increase of 6.163 million jobs in June. The substantial increase in job openings is good because there are jobs available, but it is also bad because it means employers are not able to find the right employees to fill their open positions. Schools and hospitals had the most job openings, 1.2 million, in June. There were 388,000 manufacturing job openings, 225,000 construction job openings, and 23,000 mining job openings.
After declining last week, the Mortgage Bankers Association (MBA) reports that both new purchase and refinance applications improved for the week ending 8/4. New purchase applications increased 1.0% and refinance applications are up 5.0%, for a composite increase of 3.0%. With mortgage rates still historically low, buyers may be looking in to lock low rates before further rate hikes.
Job openings and consumer spending all impact the housing market. Consumers who are gainfully employed and have the income to spend are more likely to finance high-cost purchases like housing. Strong jobs reports and low mortgage rates are positive for housing.
Sources: Bloomberg, CNNMoney, MarketWatch, Mortgage News Daily