Consumers pulled back on spending, Mortgage applications declined in latest week
December 14, 2016
Consumers pulled back on spending to begin the 2016 holiday shopping season in a month that featured the presidential election and Black Friday. The Commerce department reported that Retail Sales rose 0.1% last month, down from the 0.6% recorded in October, which was revised lower from 0.8%. Sales were up 3.8% from November 2015, which is an improvement compared with the beginning of the 2015 holiday shopping season. The report showed that sales slowed in the first two weeks of the month, but picked up after the election.
Mortgage application volume continued to decline in the latest week given the fact that the holidays are in full swing and as mortgage rates edged higher. The Mortgage Bankers Association (MBA) reported that its market Composite Index, a measure of total mortgage application volume, fell 4% in the latest week. Within the report it showed that the refinance index declined 4%, while the purchase index decreased by 3%. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417K or less) rose to its highest level since October 2014, 4.28%, from 4.27%.
The Mortgage Bankers Association (MBA) also reported this week that mortgage applications for new homes fell 3% in November from October, but were up 12% since November 2015. The MBA said the solid year-over-year rise was due to a strengthening economy and an improved job market. The average loan size for new homes in November was $329,400, up 3% from a year ago. The MBA’s Builder Applications Survey tracks application volume from mortgage subsidiaries of home builders across the country.
