Mortgage applications fell and new cars moved sideways in August – a headwind for the credit union movement, which has half its balance sheet in such loans.
On Wednesday, the Mortgage Bankers Association reported that its composite mortgage application market index for the week ending September 2 fell 0.8% on a seasonally adjusted basis from the previous week. It was the fourth consecutive week of decline in the measure.
On Friday, the U.S. Bureau of Economic Analysis reported that new cars and light trucks sold at a seasonally adjusted annual rate of 13.2 million in August, down from 13.3 million in July and up from 13.1 million in August 2021.
Callahan & Associates, the Washington, DC, credit union, announced Aug. 31 that credit unions issued $90.5 billion in home loans in the three months ending June 30, up 7, 9% compared to the first quarter, but down 3.1% compared to the previous year. .
The MBA estimated total creations for the second quarter were $678 billion, down 35% from a year earlier.
Mike Fratantoni, the MBA’s chief economist, said rising interest rates caused purchases and refinances to plummet last week.
The MBA’s seasonally adjusted buy index fell 1% from the previous week, and its unadjusted component was 23% lower than the same week a year ago.
The refinancing index, which is unadjusted, fell 1% from the previous week and 83% from a year ago. Refinances accounted for 30.7% of total requests, down from 30.3% the previous week. Refinancing began the year with 65% of requests.
The average contractual interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) rose to 5.94% from 5.80% the previous week. It stood at 2.86% at the end of 2020 and 3.33% at the end of 2021.
“Recent economic data will likely prevent any significant decline in near-term mortgage rates, but the strong labor market depicted in the August data should support housing demand,” Fratantoni said.
“There is no sign of a rebound in buying demand yet, but the robust labor market and an increase in housing inventory should lead to an eventual increase in buying activity,” he said. he declares.
Credit unions have seen “stunning” gains in auto lending this year that far exceeded CUNA forecasts, CUNA Chief Economist Mike Schenk said in a recent economic update video.
CUNA showed credit unions held $164.4 billion in new auto loans as of June 30, up 14.9% from a year earlier, while used cars rose 17. 6% to $296.3 billion.
NAFCU chief economist Curt Long said monthly new car sales were 0.7% higher than a year ago and prices for new and used cars continued to rise. ‘increase.
“Prices remain searing as global and domestic production continues to be constrained by chip shortages,” Long said. “Using dealer data, CoPilot found that, on average, used cars command a premium of $10,000 over pre-pandemic price trends.”
Long cited Cox Automotive’s Kelly Blue Book, which showed July’s average new-vehicle transaction price was the highest on record.
National production fell in July, but was 10.4% higher than the same month in 2021.
“On the supply front, AutoForecast Solutions discovered that 32,900 vehicles were cut from global production in the last week alone,” Long said. “But many buyers are unwilling or unable to wait any longer, and credit unions should continue to do well with used auto loans despite the higher rate environment.”