The Mortgage Bankers Association’s (MBA) index of mortgage applications increased by more than 3% week over week, posting a three week winning streak.
On a related note, the year fixed mortgage rates, the nation’s most popular financing option, decreased by .5% month over month to about 7.15% spurring optimism that the housing market will open up. The rate is still dramatically above 2020 rates of 3%.
While housing demand increased, it was still more than 20% below this time in 2022. Refinancing applications also rose on lower interest rates that dropped below 7% on average for existing homeowners.
The increase in activity was still extremely small compared to historic comparisons, so analysts are still split on if the market is showing signs of life or if it is just a small blip on an otherwise tight market. While home prices are stable, it is due to low inventory. Many Wall Street analysts believe the Fed is done raising interest rates, but it remains to be seen if any rate cuts come in the first half of 2024.
Meanwhile, credit card debt for American consumers are sky high even while the average credit card annual interest rate surpassed 24% last week.
Politicians claim consumer spending show that individuals are feeling better about their own situation than polls would suggest. However, high credit card debt is a risk if the economy slows and consumers have to carry the balance for longer.
Many midsize banks struggled while interest rates grew as management had not anticipated high inflation in its investment strategy leading in part to several bank closures.
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