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Personal finance weekly news roundup April 22, 2023

Weekly Personal Finance News Roundup - April 22, 2023

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Credit Sesame’s personal finance weekly news roundup April 22, 2023. Stories, news, politics and events impacting the personal finance sector during the last week.

  1. Tighter lending standards may do the job of Fed rate hikes
  2. Retail sales point to slowing economy
  3. Bankers expect more customers to fall behind on payments
  4. Wage growth has outpaced inflation over the past year
  5. Mortgage applications fall as first-time buyers retreat
  6. Home sales fall by 2.4%
  7. Mortgage rates rise after five consecutive declines
  8. Consumer credit defaults continue to rise

1. Tighter lending standards may do the job of Fed rate hikes

Treasury Secretary Janet Yellen says she expects to see banks tighten lending standards. This in turn may make fewer additional Fed rate hikes necessary. The Federal Reserve has been raising rates to slow down borrowing enough to cool off inflation. If banks make it more difficult to qualify for credit, it could have a similar impact without further rate increases. Secretary Yellen said there had already been some signs of tighter lending standards even before recent bank failures, and she expects we might see even stricter standards in reaction to those failures. See article at CNBC.com.

2. Retail sales point to slowing economy

U.S. retail sales fell for the second consecutive month in March, dropping by 1.0%. That was even worse than the 0.4% decline economists had predicted. While some of the decline in spending can be chalked up to lower prices on fuel and automobiles, it also suggested consumers are tightening their belts. Spending on general merchandise, electronics and appliances, and department store purchases all fell in March. See article at Barrons.com.

3. Bankers expect more customers to fall behind on payments

Earnings reports from some of America’s biggest banks showed lenders are setting aside larger reserves for credit delinquencies and defaults. Wells Fargo, Bank of America, JP Morgan and Citigroup were among the banks signaling caution about borrower payment habits. All stressed that late payments are still at moderate levels. However, they are preparing for missed payments to rise. The possibility of a recession is one reason why bankers fear conditions could worsen. See article at Yahoo.com.

4. Wage growth has outpaced inflation over the past year

The Bureau of Labor Statistics reported that median earnings of full-time workers were up by 6.1% during the first quarter of 2023. This narrowly exceeded the 5.8% increase in the Consumer Price Index over the same period. Median full-time pay was $1,100 a week during the quarter. Women continued to earn substantially less than men. The median weekly wage for women was $996, or 84% of the median weekly wage for men of $1,186. See news release at BLS.gov.

5. Mortgage applications fall as first-time buyers retreat05

The volume of mortgage applications fell by 8.8% last week. This included a 6% decrease in refinancing volume and a 10% decrease in new purchase applications. Purchase application volume is now 36% lower than a year ago. A rise in the average purchase loan size accompanied by a decrease in FHA mortgage applications suggests that first-time buyers have headed for the sidelines. See report at MBA.org

6. Home sales fall by 2.4%

In another sign of falling demand in the housing market, the National Association of Realtors announced that sales of existing homes fell by 2.4% in March. Homes sold at an annual pace of 4.44 million during the month. That was a little slower than the 4.5 million pace expected by economists, according to forecasts compiled by Bloomberg. Amid slowing sales volume, the median home sale price has dipped to $375,700. That’s down by 0.9% from a year ago. The inventory of houses available for sale rose by 1.0% in March and is up by 5.4% over the past year. Even so, despite the falling demand nearly two-thirds of homes sold in March were on the market for less than a month. See article at Yahoo.com.  

7. Mortgage rates rise after five consecutive declines

30-year mortgage rates increased by 0.12% last week, rising to 6.39%. This was the first rise in mortgage rates following five weeks of falling rates. The move puts rates just 0.03% below where they were when the year began. Longer term, 30-year rates are 1.28% above where they were a year ago. Mortgage finance company Freddie Mac forecasts that unless 30-year rates drop into the mid-5% range any recovery in housing demand will be modest. Meanwhile, 15-year rates experienced an even bigger jump last week, rising by 0.22% to 5.76%. See report at Freddie Mac.com

8. Consumer credit defaults continue to rise

Defaults on debt payments by consumers rose for a fifth consecutive month in March. Overall, the S&P/Experian Consumer Credit Default Composite rose by 0.02%, to 0.76%. Credit card defaults jumped more sharply, rising by 0.19% to 3.37%. Mortgage defaults were up by just 0.02%. The one outlier was the Auto Default composite, which showed defaults on auto loans declined by 0.07% during the month. See data at SPGlobal.com.

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Richard Barrington
Financial analyst for Credit Sesame, Richard Barrington earned his Chartered Financial Analyst designation and worked for over thirty years in the financial industry. He graduated from St. John Fisher College and joined Manning & Napier Advisors. He worked his way up to become head of marketing and client service, an owner of the firm and a member of its governing executive committee. He left the investment business in 2006 to become a financial analyst and commentator with a focus on the impact of the economy on personal finances. In that role he has appeared on Fox Business News and NPR, and has been quoted by the Wall Street Journal, the New York Times, USA Today, CNBC and many other publications.

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