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Personal Finance Weekly News Roundup September 3, 2022

Weekly Personal Finance News Recap - SEPTEMBER 3, 2022

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Credit Sesame’s personal finance weekly news roundup September 3, 2022. Stories, news, politics and events impacting the personal finance sector during the last week.

  1. Fed chair triggers stock slump
  2. U.S. and China regulators agree on scrutiny for Chinese stocks
  3. U.S. average credit score has leveled off
  4. Mortgage lenders showing signs of strain
  5. FBI issues warning about fraud on crypto platforms
  6. Mortgage rates rise again
  7. Mortgage applications fall to lowest level in decades
  8. Employment continues to grow as more people get back to work

1. Fed chair triggers stock slump

The U.S. stock market dropped by about 3.5% in just two trading days following comments by Fed Chair Jerome Powell. In an August 26 speech, Powell said that the Fed did not plan to ease up on raising interest rates until it was convinced that inflation was subsiding. He went further, saying that rising rates would probably cause some pain for the economy. Stock investors reacted negatively because they favor lower interest rates. There had been optimism that the Fed would stop raising rates after a couple reports indicated that consumer prices fell in July. However, month-to-month inflation numbers tend to bounce up and down a lot. Powell’s comments indicate that the Fed does not believe the period of high inflation is over yet. See full article at TheStreet. com.

2. U.S. and China regulators agree on scrutiny for Chinese stocks

Regulators from the United States and China reached a deal concerning audit rules for stocks of Chinese companies that are listed on U.S. exchanges. The deal would provide U.S. regulators with more of the accounting details typically required of publicly-traded U.S. companies. Though the agreement could pave the way for more investment in Chinese stocks, investors are still cautious. It will take time to see how the agreement works in practice and how the results of the financial audits turn out. See full article at Reuters.com.

3. U.S. average credit score has leveled off

After rising steadily in recent years, the average U.S. credit score has hit a plateau. According to Fair Isaac Corporation, creator of the FICO score, the average credit score of 716 is the same as it was a year earlier. Previously, credit scores had enjoyed a boost due to government financial aid and debt relief programs put in place due to the pandemic. FICO credit scores run from 300 to 850, and the average score of 716 would be considered good credit. See full release at FICO.com.

4. Mortgage lenders showing signs of strain

Two non-traditional mortgage lenders have gone out of business this summer, possibly signaling the negative impact of rising interest rates and slowing housing demand. First Guaranty Mortgage Corp. recently filed for bankruptcy. Sprout Mortgage ceased operations earlier in the summer. However, their problems don’t necessarily mean widespread trouble for the mortgage market. Both First Guaranty and Sprout specialized in non-qualified mortgages. These represent the higher-risk side of the market. See full article at Yahoo.com.

5. FBI issues warning about fraud on crypto platforms

One reason people are drawn to cryptocurrencies is that transactions take place outside the traditional financial system. The FBI warns that the looser scrutiny involved is quickly making crypto platforms a feeding ground for criminals. So-called decentralized finance, or DeFi, uses computer code in place of physical documentation for transactions. This leaves DeFi platforms vulnerable to hacking and theft. Chainalysis, a firm that studies blockchain transactions, reports that investors have lost over $2 billion in crypto to hackers already this year. Those losses are up sharply from last year. See full article at Yahoo.com.

6. Mortgage rates rise again

Mortgage rates rose last week, with 30-year mortgages reaching 5.66%. 30-year rates have now risen in three of the last four weeks after dipping to 4.99% in early August. While rates are still below the peak of 5.81% reached in late June, they are more than 2.5% higher than they were when the year began. See more rate data at FreddieMac.com.

7. Mortgage applications fall to lowest level in decades

The sharp rise of interest rates this year has put a damper on the mortgage market. The biggest drop in mortgage activity has come from refinance mortgages, which are 83% below last year’s level. New purchase mortgage applications have fallen in 8 of the last 9 weeks, and are now 23% below where they were a year ago. Overall mortgage application activity has fallen to a multi-decade low. The Mortgage Bankers Association cites concern over the economy along with rising interest rates as a cause of the slowdown in mortgage activity. See full release at MBA.org.

8. Employment continues to grow as more people get back to work

Employment grew by 315,000 jobs in August, continuing a trend of consistently strong growth. Despite the rise in the number of people employed, the unemployment rate increased to 3.7%. This is 0.2% higher than July’s unemployment rate, which was tied for the lowest in 50 years. The unemployment rate rose even though the number of people with jobs increased because more people decided to start looking for work again. The labor force participation rate increased by 0.3% in August, but is still 1.0% below where it was before the pandemic. That participation rate measures the percentage of the population that is either working or actively looking for work. Another noteworthy thing about August’s employment numbers is that for the first time total employment rose above the level from just before much of the economy shut down because of the pandemic. See full report at BLS.gov.

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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