If consumer spending is a keystone element in the U.S. economic recovery, a full-on rebound is likely underway.
Tuesday, the Census Bureau released its national January Retail Sales figures and, for the seventh straight month, the data surpassed expectations. Last month's retail figures climbed 0.3 percent as total sales receipts reached an all-time high.
It's good news for the economy which is scratching back after a prolonged recession, however as we have discussed in previous postings, if you're looking for a mortgage - rates have been going up since November and are not going to turn around anytime soon.
Because consumer spending accounts for the majority of the U.S. economy, Retail Sales growth means more economic growth and that growth draws Wall Street's dollars toward riskier investments, including equities, at the expense of safer investments such as mortgage-backed bonds.
On the heels of the Retail Sales report's release, bond prices are falling this morning. As a consequence, mortgage rates are rising. It's the same pattern we've seen since mid-November - "good news" about the economy sparks a stock market frenzy, causing mortgage bonds to rise.
A sampling of other recent good-for-the-economy stories include:
- Corporate earnings are rising quickly (Marketwatch)
- Existing Home Sales up 12% month-over-month (CNN Money)
- The Fed says the economy looks "brighter" (Bloomberg)
The days of 4 percent, 30-year fixed rate mortgages are over. 5 percent is the new mortgage rate benchmark. That is unless the economy continues to keep showing strength; then, that number may rise to six percent.
If you're thinking of buying or refinancing a home, consider how rising rates will impact your budget. You may want to take that next step sooner than you had planned - if only to protect your monthly payments.
Call us with any questions you have relating to residential mortgages (208) 287-1717, we are always very happy to help. We specialize in home loans for first time home buyers, move up buyers, second home purchases, and resort lending. The loan products available to my clients include FHA, IHFA, VA, Conforming Conventional, Jumbo and Super Jumbo Portfolio.
Our primary markets are Ada County (Boise, Eagle, Meridian, Kuna, Star), Canyon County (Nampa, Caldwell, Middleton), and Valley County (Cascade, Donnelly. Tamarack, McCall).
