Escrow and title payments turned negative in 2022; Median mortgage payments rose 8.8% in September
NEW YORK, October 11, 2022 /PRNewswire/ — The Bank of America Institute has released a new release today, which shows that consumer payments continued to rise in September, but the internal data adds to growing signs of a slowdown in the housing market.
Bank of America’s total payments increased 10% year-over-year (YoY) in September; this figure provides a holistic view of money flows and includes credit cards, debit cards, ACH (automated clearing house), wire transfers, bill payments, person-to-person, cash and checks. Yet the year-over-year (YoY) growth rate of electronic payments to escrow and securities companies has slowed to negative in 2022; these payments are generally used to make deposits before the closing of a home sale. The decline is consistent with the trend seen in sales of new and existing single-family homes, which have also fallen this year, according to data from the US Census Bureau.
The drivers of the housing slowdown are high valuations and rising mortgage rates, which are weighing on affordability, especially for first-time buyers. Median mortgage payments in internal Bank of America customer data rose 8.8% year-over-year in September. But a large portion of existing borrowers have fixed rate mortgages and are not yet exposed to rising rates. This may mean that their consumer spending will not be immediately affected by the deterioration in the housing market. On the other hand, approximately 34% of US households are currently renters and median rent payments on ACH, debit/credit cards and bill payments for Bank of America customers increased 8.1% year-over-year. These tenants, who are generally younger and lower income, may face greater initial pressure on their discretionary spending.
Other highlights from the release include:
- Total credit and debit card spending, which accounts for more than 20% of total payments, was up 9% year-on-year in September.
- Card spending per household rose 4.4% year-on-year, from 5.0% in August. Although some of this monthly decline can be attributed to Hurricane Ian, it appears that “real (inflation-adjusted) spending” continues to be under pressure, with price index inflation at US consumption (CPI) at 8.3% in August and personal consumption expenditure (PCE) inflation at 6.2%.
- Travel demand, especially international travel, remains resilient even as we pass the traditional peak summer season. For the 21 days following Labor Day, aggregate outlets (i.e. in person) Bank of America credit and debit card spending in foreign countries increased 29% over the same period in 2019.
“Overall, our internal data highlighted that the consumer continues to spend, despite continued inflationary pressures,” said David Tinley, senior economist for the Bank of America Institute. “However, we are seeing signs of a slowdown in the housing market, which is likely a reflection of high valuations and rising mortgage rates. The result is weighing on affordability, especially for first-time buyers, forcing some to turn to the rental market, which then creates further upward pressure on rental prices.”
About the consumer checkpoint
Consumer Checkpoint is a regular publication of the Bank of America Institute. It aims to provide a global, real-time estimate of US consumer spending and financial well-being, leveraging the depth and breadth of Bank of America’s proprietary data. This data is not intended to be representative or indicative of Bank of America’s operating results, financial conditions or performance and should not be relied upon as such.
See consumer checkpoint for methodology and definitions.
About the Bank of America Institute
The Bank of America Institute is dedicated to uncovering powerful ideas that move business and society forward. Established in 2022, the Institute is a think tank that draws on data and analysis from across the bank and the world to provide timely and original insights on economic, environmental, social and governance (ESG) and global transformation. The Institute taps into the depth and breadth of the bank’s proprietary data, sourced from 67 million consumers and small businesses, 54 million verified digital users, $3.8T of total payments in 2021 and $1.4T in consumer deposits and wealth management. From this solid data set, the Institute offers a unique perspective on the health of the economy. It also elevates thought leadership across the bank that addresses long-term trends and shares those findings with the general public.
Bank of America
Bank of America is one of the world’s leading financial institutions, serving individuals, small and medium-sized businesses, and large corporations with a full range of banking, investment, asset management, and banking products and services. other financial and risk management products and services. The company offers unparalleled convenience in United States, serving approximately 67 million retail and small business customers with approximately 4,000 retail financial centers, approximately 16,000 ATMs and award-winning digital banking services with approximately 55 million verified digital users. Bank of America is a global leader in wealth management, corporate and investment banking and trading across a broad range of asset classes, serving businesses, governments, institutions and individuals worldwide. whole world. Bank of America provides industry-leading support to approximately 3 million small business households through a suite of innovative, easy-to-use online products and services. The company serves its customers through operations across United States, its territories and about 35 countries. Bank of America Corporation (NYSE: BAC) shares are listed on the New York Stock Exchange.
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