Economic indicators

Mortgage lenders offered more cash-out refinance programs at a time when consumers might be coming to terms with the rate environment.

While the government-sponsored enterprise cut its origination forecast for this year, the Mortgage Bankers Association's updated forecast was unchanged from its October prediction.

High mortgage rates and the lack of inventory for sale pushed the sector into a downturn twice recently - between May and November last year and in May of 2023 - according to First American

Researchers at the government-sponsored enterprise also maintained their outlook for a modest recession but moved anticipated onset to the fourth quarter this year.

The American Bankers Association's credit conditions index remained near historic lows despite a slight uptick in the most recent quarter. Pessimism pervaded the outlook for both business and consumer lending.

A larger share of sellers were optimistic in May, but the percentage of enthusiastic buyers fell, according to Fannie Mae's Home Purchase Sentiment Index.

Economists lowered their projections for the consumer price index as well as the personal consumption expenditures price index for every quarter through the first half of 2024, according to the latest Bloomberg monthly survey.

The largest U.S. bank by assets raised its forecast for net interest income in 2023 to $81 billion from $74 billion, a positive sign for investors wondering how an economic downturn might weigh on profits.

The Pittsburgh bank posted a solid profit and said that it expects continued loan growth. But the pace of business expansion could slow alongside an economic downturn.

Bank of America is slowing hiring as fewer employees leave in an attempt to manage the company's headcount ahead of a possible U.S. recession, Chief Executive Brian Moynihan said.

Executives from PNC, Regions and M&T are expressing confidence that their loan books can withstand a recession. "We don't see crisis-type things in front of us right now," said PNC Chief Financial Officer Robert Reilly.

The American Bankers Association’s credit conditions index fell sharply, as economists foresaw dampening loan demand. The weaker outlook lines up with major bank CEOs’ increased worries over a possible recession.

An American Bankers Association panel of experts predicted much slower economic growth, but agreed that the U.S. economy will avoid a recession over the next couple of years.

In a recent survey, just over half of community bankers expressed concern that the central bank will harm the U.S. economy by raising rates too fast in its quest to contain inflation.

Although small banks and credit unions are enjoying healthier loan portfolios, they are also bracing for potential setbacks due to higher interest rates and inflation.

Recent existing home sales have been stronger than expected, but next year could see a market held back by the inventory shortage and higher rates.

Similarities between the current rate of appreciation and what took place between 2004 and 2006 are mitigated by changes in the housing market.

Though unlikely to derail a hot housing market, another surge in COVID-19 cases could cloud the outlook for economic growth, analysts said.

Meanwhile, investors await word from the central bank regarding monetary policy, as limited housing supply continues to drive prices upward.

A new global quarterly survey from the IACPM shows dissipating worries over COVID-19, giving way to angst of how businesses will cope with inflation and an inevitable rising-rate environment in the long-term.