Interest Rate Cuts Expand Consumer Credit Growth in Q4 2024

2025-02-11T12:20:34-06:00

Total outstanding U.S. consumer credit stood at $5.15 trillion for the fourth quarter of 2024, increasing at an annualized rate of 4.22% (seasonally adjusted), according to the Federal Reserve’s G.19 Consumer Credit Report. This is an uptick from the third quarter of 2024’s rate of 2.47%.  The G.19 report excludes mortgage loans, so the data primarily reflects consumer credit in the form of student loans, auto loans, and credit card plans. As consumer spending has outpaced personal income, savings rates have been declining, and consumer credit has increased. Previously, consumer credit growth had slowed, as high inflation and rising interest rates led people to reduce their borrowing. However, in the last two quarters, growth rates have increased, reflecting the rate cuts that took place at the end of the third quarter.   Nonrevolving Credit   Nonrevolving credit, largely driven by student and auto loans, reached $3.76 trillion (SA) in the fourth quarter of 2024, marking a 3.11% increase at a seasonally adjusted annual rate (SAAR). This is an uptick from last quarter’s rate of 2.28%, and the highest in two years.   Student loan debt balances stood at $1.78 trillion (NSA) for the fourth quarter of 2024. Year-over-year, student loan debt rose 2.77%, the largest yearly increase since the second quarter of 2021. This shift partially reflects the expiration of the COVID-19 Emergency Relief for student loans’ 0-interest payment pause that ended September 1, 2023.  Auto loans reached a total of $1.57 trillion, showing a year-over-year increase of only 0.93%. This marks the second slowest growth rate since 2010, slightly above last quarter’s rate of 0.91%. The deceleration in growth can be attributed to several factors, including stricter lending standards, elevated interest rates, and overall inflation. Although interest rates for 5-year new car loans fell to 7.82% in the fourth quarter from a high of 8.40% in the third quarter, they remain at their highest levels in over a decade.  Revolving Credit  Revolving credit, primarily credit card debt, reached $1.38 trillion (SA) in the fourth quarter, rising at an annualized rate of 7.34%. This marked a significant increase from the third quarter’s 3.01% rate but was notably down from the peak growth rate of 17.58% seen in the first quarter of 2022. The surge in credit card balances in early 2022 was accompanied by an increase in the credit card rate which climbed by 4.51 percentage points over 2022. This was an exceptionally steep increase, as no other year in the past two decades had seen a rate jump of more than two percentage points.   Comparatively, so far in 2024 the credit card rate decreased 0.12 percentage points. For the fourth quarter of 2024, the average credit card rate held by commercial banks (NSA) was 21.47%.  Discover more from Eye On Housing Subscribe to get the latest posts sent to your email.

Interest Rate Cuts Expand Consumer Credit Growth in Q4 20242025-02-11T12:20:34-06:00

Mortgage Applications Increase Marginally in January

2025-02-05T13:21:57-06:00

The Market Composite Index, a measure of mortgage loan application volume from the Mortgage Bankers Association’s (MBA) weekly survey, increased by 3.1% month-over-month on a seasonally adjusted (SA) basis, primarily driven by purchasing activity. Compared to January last year, the index is higher by 3.4%. The Market Composite Index which includes the Purchase and Refinance Indices: purchasing experienced a monthly gain of 3.8%, while refinancing decreased 2.3% (SA). On a year-over-year basis, however, the Purchase Index is lower by 3.4%, while the Refinance Index remains higher at 18.6%. The average 30-year fixed rate mortgage reported in the MBA survey for January ticked up 20 basis points (bps) to 7.02% (index level 702). This rate is 24 basis points higher than the same period last year. Average loan size (purchases and refinances combined) increased slightly by 0.8% on a non-seasonally adjusted (NSA) basis from December to $373,200. For purchase loans, the average size increased by 1.8% to $429,400, while refinance loans experienced a 5.4% decrease, reaching an average of $288,200. Adjustable-rate mortgages (ARMs) saw a continued decline in average loan size for three consecutive months, down 0.6% from $1.074 million to $1.068 million. Discover more from Eye On Housing Subscribe to get the latest posts sent to your email.

Mortgage Applications Increase Marginally in January2025-02-05T13:21:57-06:00

Mortgage Rates Tick Upward in January

2025-01-31T09:18:21-06:00

Mortgage rates edged higher in January, with the average 30-year fixed-rate mortgage reaching 6.96%. Rates had been climbing steadily since mid-December—even surpassing 7%—before easing in recent weeks as the bond market stabilized following news that President Donald Trump postponed tariffs plans to February 1. According to Freddie Mac, the average rate for a 30-year fixed-rate mortgage rose 24 basis points (bps) from December, extending a two-year trend of fluctuations between 6% and 7%. Meanwhile, the 15-year fixed-rate mortgage increased 23 bps to land at 6.13%. The 10-year Treasury yield, a key benchmark for mortgage rates, averaged 4.63% in November—33 basis points higher than December’s average. A strong economy, coupled with ongoing uncertainty over inflation due to tax cuts and tariffs, continues to put upward pressure on yields. This uncertainty is also reflected in the increased range for the projected 2025 core PCE inflation in the December FOMC economic projections, now estimated between 2.1% and 3.2%, compared to a narrower 2.1% to 2.5% range in September. Discover more from Eye On Housing Subscribe to get the latest posts sent to your email.

Mortgage Rates Tick Upward in January2025-01-31T09:18:21-06:00

Mortgage Applications Increase Marginally in December

2025-01-10T10:22:07-06:00

The Market Composite Index, a measure of mortgage loan application volume from the Mortgage Bankers Association’s (MBA) weekly survey, increase marginally by 2.9% month-over-month on a seasonally adjusted (SA) basis. Compared to December 2023, the index is higher by 10.2%. The Market Composite Index includes the Purchase and Refinance Indices, which saw monthly gains of 4.1% and 6.7% (SA), respectively. On a year-over-year basis, the Purchase Index showed a modest increase of 1.1%, while the Refinance Index is 31.7% higher. The average 30-year fixed rate mortgage reported in the MBA survey for December remained relatively stable at 6.82% (index level 682), reflecting a minor decline of 0.4 basis points. This rate is 9 basis points lower than the same period last year. Average loan sizes, excluding refinance loans, saw slight declines in December. On a non-seasonally adjusted (NSA) basis, the average loan size (purchases and refinances combined) fell by 2.1% from November to $370,300. For purchase loans, the average size decreased by 3.3% to $421,800, while refinance loans experienced a 4.8% increase, reaching an average of $304,500. Adjustable-rate mortgages (ARMs) also saw a marginal decline in loan size, down 0.8% from $1.08 million to $1.07 million. Discover more from Eye On Housing Subscribe to get the latest posts sent to your email.

Mortgage Applications Increase Marginally in December2025-01-10T10:22:07-06:00

Mortgage Activity Declines in November as Rates Continue to Increase

2024-12-13T09:19:24-06:00

The Market Composite Index, a measure of mortgage loan application volume by the Mortgage Bankers Association’s (MBA) weekly survey, decreased 14.5%, month-over-month, in November on a seasonally adjusted (SA) basis. The slowdown in mortgage activity can be attributed to higher mortgage rates as the ten-year Treasury yield increased in November, reflecting uncertainties surrounding the elections. The market decline was reflected primarily in the Refinance Index (SA), which decreased by 33.2% month-over-month. Meanwhile, the Purchase Index (SA) showed a modest increase of 2.7% over the same period. However, compared to October 2023, the Market Composite Index is up by 16.4%, with the Purchase Index seeing a slight 4.8% increase and the Refinance Index higher by 45.9%. The average contract rate for 30-year fixed mortgage rate per the MBA survey for November averaged at 6.8%, 29 basis points (bps) higher month-over-month in response to a higher ten-year Treasury rate. Loan size metrics also reflected market adjustments. The average loan size for the total market (including purchases and refinances) shrank 2.9% month-over-month on a non-seasonally adjusted (NSA) basis, decreasing from $389,800 to $378,400. Loan sizes for purchasing and refinancing decreased. Purchase loans averaged $436,200, down 2.7% from $448,300, while refinance loans saw a sharper 9.9% decrease, with the average loan size falling from $322,500 to $290,600. Adjustable-rate mortgages (ARMs) also declined 6.0%, from $1.15 million to $1.08 million. Discover more from Eye On Housing Subscribe to get the latest posts sent to your email.

Mortgage Activity Declines in November as Rates Continue to Increase2024-12-13T09:19:24-06:00