The main U.S. agency that oversees financial products in services in the US is currently shutdown. Born of the 2008 financial crisis the CFPB has recouped nearly $20B for 195M American consumers and brought enforcement actions against 377 businesses operating illegally. Some of the largest wins have been capping and limiting overdraft fees, as well as removing medical bills from credit reports (or using medical information to decide to approve/deny loans). They were an excellent source of public information for rules around credit scores and a good place to report bad apples. Many in the mortgage and banking industry found the CFPB to have a lot of power and not enough oversite, causing compliance expenses to skyrocket. The Mortgage Industry survived a long time without the CFPB, and the laws they enforced are still in place. We will see what the new version of this enforcement institution looks like (assuming there will be something) and what sort of impact it will have on consumers and lenders.
Mortgage Rates improved marginally this week as the price of Mortgaged-Backed Securities (MBS) improved slightly continuing their upward trend. Rates are down approximately 0.25% from this time last year.
Retail Sales – the Census Bureau’s monthly report showed that retail sales fell 0.9% in January recording the biggest drop in 2 years. While retail sales do often decline in January online sales also fell 2% and those sales are not typically impacted by weather. Credit card debt is at an all-time high of $1.2 and that could be contributing to the decline.
Inflation – the BLS released their Producer Price Index report and it showed that the core rate of inflation increased from 0.4% month over month and 3.7% year over year (both figures were upticks from the previous report). Energy prices rose 1.7% while food rose 1.1%. Egg prices comprised 44% of the price increase.
The Consumer Price Index rose 0.5% from the previous month and is up 3% year over year. The core rate, which strips out food and energy, increased 0.4% from last month and is up 3.3% year over year. Both of these reports were higher than the market anticipated.
Mortgage Applications to purchase homes fell 2% last week and are up 2% year over year. Refinances rose 10% last week and are up 33% year over year.