The huge jump in credit card debt reported yesterday by the Fed was received as "good news" for consumer spending. However, this is typical technical color vomit served up through the mainstream financial media by Establishment "economists" and Wall Street. The likely explanation is that the average consumer is now forced to use revolving credit in order to maintain the current lifestyle. This assertion is reinforced by the fact that the latest data from Transunion show that personal loans hit a record high in Q1 2018.
The homebuilder sector is in trouble. A Colorado-based credit union is now offering 0-percent down payment mortgages. Credit Union of Colorado will underwrite the 3% down payment FNM/FRE mortgage product and it will cover the remaining 3% of a home's cost by giving the "buyer" an interest-free loan that is repayable at a future date or through a refinancing. The bank is charging 0.375% more for the mortgage than the rate for a 3% down payment conforming mortgage. The bank is betting the value of these homes will rise enough to cover the 3% down payment loan through a refinancing. This is a de facto zero-down payment mortgage sponsored by the Government.