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News roundup May 11, 2024

finance news May 11 2024

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Credit Sesame’s personal finance news roundup May 11, 2024. Stories, news, politics and events impacting personal finance during the past week.

Consumers gloomy about housing affordability

The Federal Reserve Bank of New York’s 2024 Survey of Consumer Expectations Housing Survey found that consumers expect housing to continue to get more expensive in the year ahead. Both prospective buyers and renters expressed concerns about affordability. Survey respondents expect home prices to rise by an average of 5.1% in the year ahead. Perhaps even more ominously, they expect mortgage rates to rise to 8.7% over the next year and 9.7% in three years. As for renters, they expect the average rent to increase by 9.7% over the next year. See news release at NewYorkFed.org.

Paying down debt top financial goal for adults of all ages

A new report by PYMNTS Intelligence found that paying down debt is a leading financial goal for young and old adults 15.2% of Generation Z consumers cite paying down debt as their number one financial goal. This was a higher percentage than any other financial goal, including buying a house or a car. Among Baby Boomers and Seniors, 21.7% identified paying down debt as their top financial goal. This exceeded every other goal except saving for retirement. See article at PYMNTS.com.

Borrowing binge may ease

The most recent Federal Reserve Senior Loan Officer Opinion Survey showed signs that new borrowing may slow for businesses and consumers. Loan officers reported that lending standards had tightened, and demand had weakened for C&I (commercial and industrial) loans and commercial real estate loans. Similar conditions of tougher standards and weaker demand were reported for various consumer credit categories, including home equity lines of credit, credit cards, auto loans, and other non-mortgage consumer loans. See report details at FederalReserve.gov.

Debt growth slows

The Federal Reserve announced that total non-mortgage consumer debt grew at a seasonally adjusted annual pace of just 1.5% in March. That represents a slower pace than the 3.2% annual rate for the first quarter overall. In March, revolving credit grew at a slower pace than non-revolving credit for the first time in 31 months. That’s significant because revolving debt generally carries higher interest rates than non-revolving debt. See data on consumer credit at FederalReserve.gov.

Home price increases mild but widespread

The National Association of Realtors found that 93% of the 221 metropolitan areas it tracks experienced home price increases in the first quarter of 2024. Overall, the national median home price climbed by 5% compared to a year earlier. That brought the national median home price to $389,400. Home price increases have continued despite higher mortgage rates. 30% of metro areas experienced double-digit year-over-year median price increases. The most expensive housing market is the San Jose-Sunnydale-Santa Clara metro area in California, where the median residential property goes for $1,840,000. See news release at NAR.Realtor.

Small business owners optimistic

A TD Bank survey of small business owners found they are even more optimistic than a year ago. Ninety percent have a positive outlook for their business prospects in the year ahead, up from 80 percent a year ago. Ninety-four percent say they have no plans to sell or close their business, and more than half (59%) have plans to expand. On the negative side, more than half (56%) cited high interest rates and inflation as prominent concerns. See article at ABA.com.

Consumers get reprieve from rising mortgage rates

30-year mortgage rates fell last week for the first time since March 2024. 30-year rates dropped by 0.13% to 7.09%. 15-year rates dropped by 0.09% to 6.38%. Before last week, 30-year rates had risen for five straight weeks. Even with the previous week’s decline, 30-year rates are still 0.48% higher than when this year began. See mortgage rate details at FreddieMac.com.

Gen Z adopting credit faster than Millennials

A new TransUnion survey finds that today’s 22 to 24-year-olds are using credit more heavily than their counterparts did a decade ago. 84% of that age group now have a general-purpose credit card, compared to 61% of people in that age group a decade ago. Members of Gen Z are also making heavier use of auto loans than millennials did a decade ago, by a margin of 30% to 25%. Even after adjusting for inflation, today’s young adults carry higher debt balances than the same age group a decade ago. Today’s inflation-adjusted balances on credit cards, auto loans, personal loans, and mortgages are all higher for 22- to 24-year-olds. See details at TransUnion.com.

Weekly news headlines from Credit Sesame

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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