Posted On September 13, 2019
Mortgage rates stayed near year-long lows this week, skewing slightly higher according to some sources. Consumer credit expanded in July, powering overall economic growth. Job openings are down and voluntary quit rates are up, as the labor market stays strong. Both new purchase and refinance mortgage application submissions are up.
Consumer borrowing accelerated in July, at the fastest pace in about two years. Overall, consumer credit increased at an annual growth rate of 6.8%, up $23.3 billion. Revolving credit, like credit card debt, increased 11.3% in July. Nonrevolving credit, like student loans and auto loans, increased 5.3% in July. With global trade tensions and businesses pulling back on investments, the economy is depending on consumer spending to propel growth. Based on July’s data, consumers are not phased by recession talks.
Job openings fell slightly in July, down 0.4% to level of 7.217 million. Hiring is up 4.1% to a rate of 5.953 million. Voluntary quits increased sharply, up 2.4% at a rate of 3.592 million. The increase in quits suggests that workers are feeling more confident in the strong job market, and confident that if they choose to change jobs they will find comparable employment.
Both new purchase and refinance mortgage application submissions increased for the week ending 9/6. New purchase applications are up 4.0% and refinance applications are up 5.0% for a composite increase of 2.0%. Refinance activity has been steady for much of 2019, but purchase-wise, August was the busiest month of the year.
A strong labor market and healthy consumer spending may counterbalance some recession woes, despite ongoing trade wars and global economic unrest. If August’s momentum continues, this Fall will likely be a strong housing season, especially for buyers looking to save with low mortgage rates.