Consumer credit, Fed concern and rising mortgage rate

The Federal Reserve said Wednesday that borrowing declined by $11.5 billion in February, much weaker than the $500 million gain that economists had expected. The February weakness reflected a sizable 13.6 percent drop in revolving loans, the category that includes credit card debt. On the news, American Express (AXP) dropped nearly 2%.

Consumers are cautious. It's still difficult to find jobs.

In remarks to business people in Dallas on Wednesday, Fed chairman Ben Bernanke said he saw no evidence of a "sustained recovery" in the housing market, noting that foreclosures keep rising. Commercial real estate remains a trouble spot, too.


The toughest problems are in the job market. Even though layoffs have slowed, hiring is "very weak," Bernanke said. He noted that unemployment, now at 9.7 percent, is still close to its highest levels since the early 1980s.

Record-low interest rates should help foster the recovery, but economic growth won't be robust enough to quickly drive down the jobless rate, Bernanke indicated.

The average rate on a 30-year loan has jumped from about 5 percent to more than 5.3 percent in just the past week. As mortgages get more expensive, more would-be homeowners are priced out of the market -- a threat to the fragile recovery in the housing market.

These factors drove down REITs and home builder stocks on Wednesday.