Escrow and title payments turned negative in
2022; Median mortgage payments rose 8.8% in September
NEW
YORK, Oct. 11, 2022 /PRNewswire/ -- The Bank of
America Institute released a new publication today which shows
that consumer payments continued to increase in September, but
internal data adds to growing signs that the housing market is
slowing down.
Bank of America total payments increased 10% year over year
(YoY) in September; this figure offers a holistic view of
money flow and includes credit card, debit card, ACH (automated
clearing house), wires, bill pay, person-to-person, cash and
checks. Yet the year over year (YoY) growth rate in wire
payments to escrow and title companies has been slowing and turned
negative in 2022; these payments are typically used to pay
deposits ahead of closing a housing sale. This decline is
consistent with the pattern observed in new and existing
single-family home sales, which have also been falling this year,
according to US Census Bureau data.
Driving the housing slowdown are high valuations and rising
mortgage rates, which are weighing on affordability, particularly
for new buyers. Median mortgage payments in Bank of America
internal customer data rose 8.8% YoY in September. But a large
proportion of existing borrowers are under fixed-rate mortgages and
are not yet exposed to rising rates. This may mean their consumer
spending will not be immediately impacted by a deteriorating
housing market. On the other hand, roughly 34% of US households are
currently renting and median rent payments across ACH,
debit/credit cards and bill payments for Bank of America customers
increased by 8.1% YoY. These renters, typically younger and on
lower incomes, may face more upfront pressure on their
discretionary spending.
Other highlights of the publication include:
- Total credit and debit card spend, which makes up over 20%
of total payments, was up 9% YoY in September.
- Card spending per household increased by 4.4% YoY, down from
5.0% in August. While some of this monthly decrease can be
attributed to Hurricane Ian, it appears "real (inflation-adjusted)
spending" continues to be under pressure, with US Consumer Price
Index (CPI) inflation at 8.3% in August and Personal Consumer
Expenditure (PCE) inflation at 6.2%.
- Travel demand, particularly international travel, remains
resilient even as we pass the traditional summer peak season. For
the 21-days post-Labor Day, aggregated point-of-sale (i.e.,
in-person) Bank of America credit and debit card spending in
foreign countries was up 29% compared with the same period in
2019.
"Overall, our internal data underscored that the consumer is
still spending, despite continued inflationary pressures," said
David Tinsley, senior economist for
the Bank of America Institute. "However, we're 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 particularly for new buyers, forcing some into the
rental market, which then creates further upside pressure on rent
prices."
About the Consumer
Checkpoint
Consumer Checkpoint is a regular publication from the Bank of
America Institute. It aims to provide a holistic and real-time
estimate of US consumers' spending and their financial well-being,
leveraging the depth and breadth of Bank of America proprietary
data. Such data is not intended to be reflective or indicative of,
and should not be relied upon as, the results of operations,
financial conditions, or performance of Bank of America.
See the Consumer Checkpoint for methodology and definitions.
About the Bank of America
Institute
The Bank of America Institute is dedicated to uncovering
powerful insights that move business and society forward.
Established in 2022, the Institute is a think tank that draws on
data and analyses from across the bank and the world to provide
timely and original perspectives on the economy, Environmental,
Social and Governance (ESG), and global transformation. The
Institute leverages the depth and breadth of the bank's proprietary
data, from 67 million consumer and small business clients, 54
million verified digital users, $3.8T
in total payments in 2021 and $1.4T
in consumer and wealth management deposits. From this robust data
set, the Institute provides a unique perspective on the health of
the economy. It also elevates thought leadership from throughout
the bank that addresses long-term trends and shares these findings
with the general public.
Bank of America
Bank of America is one of the world's leading financial
institutions, serving individual consumers, small and middle-market
businesses and large corporations with a full range of banking,
investing, asset management and other financial and risk management
products and services. The company provides unmatched convenience
in the United States, serving
approximately 67 million consumer and small business clients with
approximately 4,000 retail financial centers, approximately 16,000
ATMs, and award-winning digital banking 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 corporations,
governments, institutions and individuals around the world. Bank of
America offers 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
clients through operations across the
United States, its territories and approximately 35
countries. Bank of America Corporation stock (NYSE: BAC) is listed
on the New York Stock Exchange.
For more Bank of America news, including dividend announcements
and other important information, visit the Bank of America newsroom
and register for news email alerts.
Reporters may contact:
Melissa
Anchan, Bank of America
Phone: 1.646.532.9241
melissa.anchan@bofa.com
View original content to download
multimedia:https://www.prnewswire.com/news-releases/consumer-payments-continued-to-increase-in-september-finds-bank-of-america-data-yet-evidence-of-a-housing-market-slowdown-emerges-301645821.html
SOURCE Bank of America Corporation