Archive for 'Retail Sales'
Retail Sales Rise For 7th Straight Month; Mortgage Rates Worsen
February 15th, 2011. Published under Retail Sales. No Comments.
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, but decidedly bad news for people in want of a mortgage. This includes home buyers and would-be refinancers alike.
Because consumer spending accounts for the majority of the U.S. economy, Retail Sales growth means more economic growth and that 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, casuing 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 market benchmark. Unless the economy keeps 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 hit your budget. You may want to take that next step sooner than you had planned — if only to protect your monthly payments.
Retail Sales Weak In December; Home Affordability Gets A Boost
January 13th, 2011. Published under Retail Sales. No Comments.
Consumers keep spending, the economy keeps growing.
Mortgage rates are easing lower this morning on just-released, slightly worse-than-expected Retail Sales data from December 2010.
Excluding motor vehicles and auto parts, December’s sales receipts were $1.5 billion higher from November. Analysts had expected a number north of $2 billion.
Despite falling short of estimates, however, December’s reading is the highest in Retail Sales history, surpassing the previous record set in July 2008, set during the recession. In addition, December’s strong numbers helped 2010′s year-over-year numbers go positive for the first time in 3 years.
Although the data is a mixed bag for Wall Street, home affordability is improving today.
The link between Retail Sales and home affordability may not be up-front obvious, but in a post-recession economy like ours, it’s often tight. Retail Sales is another name for “consumer spending” and consumer spending makes up more that 70% of the U.S. economy.
As spending grows, the economy tends to, too.
Investors recognize this and start chasing “risk”. It becomes a boost for the stock market, but those gains are made at the expense of “safe” asset classes which include mortgage-backed bonds. Mortgage-backed bonds are the basis for conforming and FHA mortgage rates so, as bond markets sell off, asset prices fall and rates move up.
Thankfully, rate shoppers will avoid that scenario today — at least for today. December’s Retail Sales results are a factor in the bond market’s early-day improvement. Conforming and FHA mortgage rates should be lower today.
Despite the good news, if you’re shopping for a mortgage, consider locking your rate as soon as possible. Mortgage rates are coming off a 2-week rally and look poised to reverse appear — especially with a full docket of data due for next week. As mortgage rates rise, purchasing power falls.
Retail Sales Dropped In December And Now So Are Mortgage Rates
January 14th, 2010. Published under Retail Sales. No Comments.
Mortgage rates are dropping this morning on weaker-than-expected Retail Sales data from December. Lower rates means more bang for your home-buying buck.
Excluding motor vehicles and parts, December’s “ex-auto” sales receipts were down roughly $500 million from November. Analysts had expected receipts to grow.
The relevance of Retail Sales to home affordability isn’t obvious, but it’s definitely logical.
Retail Sales is directly related to consumer spending and consumer spending accounts for the majority of the U.S. economy. When consumer spending slows, the economy often does, too. It leads investors to seek out “safe” investments.
It’s the reason why stock markets often drop on weak economic data — stocks are among the riskiest investment classes available.
Conversely, the best place to find safety is in the market of government-backed bonds. This world includes products like U.S. Treasuries and many of the mortgage-backed bonds that help set mortgage rates for people in Chicago. Weak economic data puts mortgage bonds in demand.
For rate shopper, this is good news. More demand for mortgage bonds causes mortgage rates to fall. Mortgage rates are lower this morning because Wall Street is shedding some risk.
December’s Retail Sales report closes out a year of generally-weak data. 2009 marks just the second time that Retail Sales fell year-over-year since the government started tracking it 40 years ago. The other year was 2008.
For home buyers in Lincoln Park and around the country, though, today may represent an opportune time to lock a mortgage rate. Housing data is still improving and other economic indicators are showing strength. Soon, Wall Street will shift from a “safe” mentality and move toward risk.
When it does, mortgage rates will rise.
