Mortgage Applications Falling, Consumer Credit Balances Rising

The housing market may be falling into a recession, but consumers continue to spend—though they have needed to borrow more to do so. The seasonally adjusted purchase Index for mortgage applications, compiled by the Mortgage Bankers Association, decreased 7% w/w and 21% y/y during the week ended June 3. Record-high home prices combined with this year’s spike in the mortgage rate to 5.40% have clobbered housing affordability.

Americans are continuing to increase their credit balances at a rapid pace as one way of dealing with rampant inflation. In April, consumer credit increased at a seasonally adjusted annual rate of 10.1%. Revolving credit increased at an annual rate of 19.6%, while nonrevolving credit increased at an annual rate of 7.1%.