Credit Sesame’s personal finance weekly news roundup November 26, 2022. Stories, news, politics and events impacting the personal finance sector during the last week.
- Existing home sales continue nine-month slide.
- Holiday spending not expected to keep pace with inflation.
- Application rates reflect a growing appetite for credit cards.
- Student loan payments get another pause amid confusion.
- Pay raises lagging behind worker expectations.
- Mortgage applications get a short-term bump.
- Cost of Thanksgiving dinner reflects high inflation.
- Mortgage rates ease for the second consecutive week.
1. Existing home sales continue nine-month slide
Sales of existing homes declined for the ninth consecutive month in October. Sales volume declined by a seasonally-adjusted 5.9% for the month. Year-over-year, sales volume was down by 28.4%. While a recent dip in mortgage rates may revive home buying somewhat, those rates are still more than twice as high as they were at the start of the year. Home buying surged in the latter half of 2020, but now has fallen below pre-pandemic levels. See article at Yahoo.com.
2. Holiday spending not expected to keep pace with inflation
A survey by accounting firm Deloitte previewed the holiday shopping plans of American consumers. On average, people plan to spend $1,455 this holiday season. That’s slightly below last year’s figure of $1,463 and even further below the pre-pandemic average spend of $1,496. The drop-off is even steeper when you consider this year’s high inflation rate. The survey found that 37% of respondents said their financial situation had worsened since last year. That’s a sharp increase from the 22% who reported that their finances had gotten worse in 2021. 38% of respondents said they plan to start holiday shopping earlier this year. Even so, 49% still plan to shop on key retail sale days like Black Friday and Cyber Monday. See full report at Deloitte.com.
3. Application rates reflect a growing appetite for credit cards
New figures from the New York Fed showed that applications for new credit cards have risen in 2022. 27.1% of consumers surveyed in October said they expect to apply for a new credit card within the next year. That’s higher than the level from a year ago and from before the pandemic. This appetite for new credit is growing despite that fact that credit card debt is already at an all-time high. The rising demand for new credit cards also bucks the general trend for consumer credit. Application volume for other forms of credit has fallen this year. That includes purchase mortgages, refinance mortgages and auto loans. See full release at NewYorkFed.org.
4. Student loan payments get another pause amid confusion
In response to confusion created by legal challenges to his student loan forgiveness program, President Biden has extended the moratorium on payments again. Payments that were set to resume on January 1, 2023 now won’t start up again until after June 30 of next year. The pause is intended to give the courts time to conclude whether or not the forgiveness program is constitutional. That will provide borrowers with clarity on whether they need to start making payments again and how much those payments will be. See full article at Yahoo.com.
5. Pay raises lagging behind worker expectations
A pair of recent surveys indicate that many employers are at risk of failing to meet their employees’ expectations for pay increases. Consulting firm Willis Tower Watson found that employers are planning on raising wages by 4.6% next year. While that’s the biggest planned pay increase since 2007, it may not be enough to satisfy employees in a tight labor market. A survey by the Society of Human Resource Management’s Research Institute found that it would take raises of between 8% to 10% to retain workers. See article at Yahoo.com.
6. Mortgage applications get a short-term bump
A rise in mortgage applications shows how eager consumers are to jump on any relief from high interest rates. Following a rare drop in mortgage rates the previous week, seasonally-adjusted mortgage application activity rose by 2.2% last week. New purchase applications rose by 3% and refinance applications rose by 2%. Even so, both are down sharply from their levels a year earlier. Purchase applications are down by 41% over the past year while refinance applications are down by 86%. See full report at MBA.org.
7. Cost of Thanksgiving dinner reflects high inflation
Thanksgiving didn’t give consumers a chance to escape inflation concerns. A survey by the American Farm Bureau found that the cost of a traditional Thanksgiving dinner rose by 18% since last year, from $68.72 to $81.30. The cost of the meal’s centerpiece, a 16-pound turkey, was up by 21%. The biggest increase was the cost of stuffing, which was 69% higher than last year. Only cranberry lovers found any good news. The cost of fresh cranberries was down 14% from last year. See graphic at BankingJournal.ABA.com.
8. Mortgage rates ease for second consecutive week
Mortgage rates continued to respond favorably to a report from two weeks ago that showed milder-than-expected inflation. 30-year fixed mortgage rates fell by 0.03% last week, to 6.58%. After falling for two weeks in a row, they are now down by half a percentage point from their peak. 15-year fixed mortgage rates fell by 0.08% last week to 5.90%. They’ve also fallen for two weeks in a row and are now down by a total of 0.48% from their peak. Even so, both 30-year rates and 15-year rates remain more than twice what they were when the year began. See mortgage data at FreddieMac.com.
