Consumer Payments Continued to Increase in September, finds Bank of America Data, Yet Evidence of a Housing Market Slowdown Emerges

October 11, 2022 at 7:00 AM Eastern

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.

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Reporters may contact:

Melissa Anchan, Bank of America
Phone: 1.646.532.9241

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