Retail Sales

Home Affordability Set To Worsen On Thursday’s Retail Sales

Consumer spending continues to rise nationwide, fueled by jobs growth and a rosier outlook for the U.S. economy. Unfortunately for mortgage rate shoppers in Crown Point Indiana, it may also lead to higher mortgage rates later this week.

Thursday morning, the Census Bureau will release its U.S. Retail Sales data for December. The report is expected to show an 18th consecutive monthly increase, with analysts projecting sales volume higher by 0.4 percent from November.

This would be double the increase from last month, which saw a 0.2 percent increase in Retail Sales.

The Retail Sales report tallies receipts collected by retail and food-service stores nationwide. When the sum of these receipts rise, it puts pressure on mortgage rates to do the same. The connection is straight-forward.

Retail Sales are the largest part of “consumer spending” and consumer spending accounts for the majority of the U.S. economy — up to 70 percent, by some estimates.

As the economy goes, so go mortgage rates.

Remember: today’s ultra-low mortgage rates have been partially fueled by weak economies — both domestic and abroad — going back 4 years. Stock markets have sold off as economies have faltered worldwide, leading investors to seek refuge in the relative safety of U.S.-backed mortgage bond market. The new-found demand for mortgage-backed bonds has helped drop mortgage rates to levels never seen in history.

When economic recovery is apparent, therefore, we should expect a mortgage rate reversal, and should expect for it to happen quickly. Stock markets should rise; bond markets should fall. Mortgage rates will climb. Rate shoppers will lose.

Last week’s strong jobs report sparked hope for the U.S. economy. If Thursday Retail Sales data reveals similar strength, the risk in “floating” your mortgage rate may be too great. The safer play is to lock your rate today.

The Retail Sales report will be released at 8:30 AM ET.

Retail Sales

The Week Ahead for Mortgage Rates: January 9, 2012

Mortgage markets improved last week, pushing mortgage rates in Indiana lower for the second straight week. Conforming fixed and adjustable-rate mortgage cut new, all-time lows, and FHA mortgage rates did the same.

In a holiday-shortened trading week, stronger-than-expected U.S. economic data and ongoing weakness within Europe drove investors into the U.S. mortgage-backed bond market. When demand for bonds is high, mortgage rates improve.

The Refi Boom continues.

Since beginning their descent last February, mortgage rates have shed 114 basis points en route to reaching 3.91%, the current, “average”, 30-year fixed rate mortgage rate nationwide and a new all-time low, according to Freddie Mac and its mortgage market survey.

If you’re among today’s home buyers or would-be refinancers, on a $200,000 mortgage, the 1.14% rate drop represents a monthly mortgage payment savings of $135 — $1,623 per year.

Larger loans save more, smaller loans save less.

This week, with little economic news set for release, mortgage rates are expected to take their cue from the 8 Federal Reserve members scheduled to speak in public, and from whatever news may bubble up from the Eurozone.

The Federal Reserve said it will communicate its vision for the U.S. economic more openly and more often so Wall Street will be watching the Fed members’ speeches this week, in search of clues about the Fed’s 2012 roadmap.

For example, there has been speculation that a new round of stimulus would be introduced at the Fed’s next meeting later this month. If, after listening to this week’s speeches, investors sense it will happen, mortgage rates may be susceptible to an increase in Schererville and everywhere else.

We’ll also be watching the Retail Sales report this week, due Thursday. Retail Sales are a reflection on consumer spending and consumer spending accounts for roughly 70% of the U.S. economy. If Retail Sales make gains, it may spark stock market gains at the expense of mortgage bonds.

This, too, would result in higher mortgage rates.

You can’t time the mortgage market, but with mortgage rates this low, it’s hard to go wrong. Complete the “Live Rate Quote” form to the right to get a live rate quote today.

The economic calendar this week has the following key economic and financial reports.

This is The Week Ahead for Mortgage Rates: January 9, 2012.

Quick general rule of thumb when keeping an eye on mortgage rates.

Strong Economic News: $$$ from Bonds —> Stocks = Home Loan Rates Worsen

Weak Economic News: $$$ from Stocks —> Bonds = Home Loan Rates Improve

If you or someone you know is thinking about buying a home, the combination of low home loan rates and affordable home prices make this an ideal time to buy a home. Want to know if you can afford a new home? Call or text me at 512-522-7284 to discuss your personal situation and your home loan options!

Retail Sales

We Support Small Business Saturday – November 26, 2011

The 2nd annual Small Business Saturday® is a day dedicated to supporting small businesses on one of the busiest shopping weekends of the year.

On November 26, we’re asking millions of people to Shop Small at their favorite local stores and help fuel the economy. When we shop small, it will be huge. Pledge your support for Small Business Saturday®.

You can receive a one-time $25 statement credit when you register any eligible American Express® Card and use that Card to make a purchase of $25 or more at a small business on November 26, 2011. To be eligible, you must register your American Express® Card.

Don’t have an American Express card? That’s OK! You will still benefit from shopping at an independently owned store by knowing that you are supporting your local community.

When our small businesses are thriving and growing, we are able to attract more consumers and new small businesses to our community. The growth of multiple small businesses can allow the community benefits such as lower property taxes, higher home values, and more maintained streets.

All of us are always looking for the best use from our money and it is next to impossible to not shop at the big box stores and eat at the chain restaurants. While we can still pick up deals and savings, we can help do our part to grow the local economy by visiting stores owned by members of our community.

I urge each of you to find a locally owned business over this holiday season to help our local economy grow!

You can do it. Share your favorite local small businesses and don’t keep them or I  a secret. Happy Shopping.

Retail Sales

We Support Small Business Saturday – November 27, 2010

It is that time of year that many of us will be out looking for deals for our holiday celebrations.

With this brings the long waited for Black Friday that big chain stores lure us into their doors for the blockbuster deals they can provide so we can buy more for our money.

While these deals are often hard to pass up and can boost the economy with many consumers shopping, we often forget about our local economy.

This year is different! The first ever Small Business Saturday will take place on November 27, 2010 all across America!

American Express is offering their registered customers a $25.00 statement credit when they spend $25.00 or more at a local business on Saturday. To be eligible, you must register your card by November 27.

Don’t have an American Express card? That’s OK! You will still benefit from shopping at an independently owned store by knowing you are supporting your local community.

When our small businesses are thriving and growing, we are able to attract more consumers and new small businesses to our community. The growth of multiple small businesses can allow the community benefits such as lower property taxes, higher home values, and more maintained streets.

All of us are always looking for the best use from our money and it is next to impossible to not shop at the big box stores and eat at the chain restaurants. While we can still pick up deals and savings, we can help do our part in the local economy growth by visiting stores owned by members of our community.

I urge each of you to find a locally owned business over this holiday season to help our local economy grow!

You can do it. Share your favorite local small businesses and don’t keep them or I  a secret. Happy Shopping.

Retail Sales

What’s Ahead for Mortgage Rates This Week: June 14th

Mortgage markets posted four good days last week and one awful one.  Unfortunately for rate shoppers in Indiana, that one bad day outweighed the gains of the other four and mortgage rates worsened on the week overall.

Despite re-touching all-time lows on Tuesday and Wednesday, Conforming and FHA mortgage rates moved higher on the week.

There wasn’t much domestic data on which for mortgage markets to move so rates took their cues from global economic activity. Strong data from Japan and China, plus an improving outlook from the Eurozone, sparked optimism among Wall Street investors. Cash poured into the stock market and it happened at the expense of bonds — including the mortgage-backed ones.

It’s the primary reasons rates rose and not even the worst Retail Sales report in 8 months could undue the damage.

Often, weak Retail Sales data causes mortgage rates to fall. Last week, however, that wasn’t the case. 

This week, there’s cause for rates to rise again with Wednesday emerging as a “data day”.

First, at 8:30 AM ET, the government releases two key housing statistics and one major gauge for inflation — Housing Starts, Building Permits and Producer Price Index, respectively.  Strength in any or all three should lead mortgage rates higher.

Then, at 5:45 PM ET, Fed Chairman Ben Bernanke makes a public speech and anytime Bernanke speaks, mortgage rates can move.

Mortgage rates remain unnaturally low and a lot of Hoosiers have taken advantage already. If you’re a homeowner and you’ve wondered whether or not a refinance makes sense, talk to your loan officer straight away. Low rates like this can’t last forever so lock one in while you can.

Retail Sales

December Retail Sales Drop and Now Mortgage Rates Follow

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.  Weak economic data puts mortgage bonds in demand.

For a rate shopper in Northwest Indiana, 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 2nd 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 around the country and especially in Northwest Indiana, 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.

Need more expert advice? Ask the team of Certified Mortgage Planning Specialists at Benchmark Mortgage.

Retail Sales

Retail Sales and Home Affordability a Volatile Cocktail

If you wonder what mortgage rates and home affordability will look like next year, today’s Retail Sales data may hold your answer.

Versus October, November’s ex-auto sales were up by more than 1 percent. Analysts expected the increase, but not an increase of this magnitude.

“Ex-auto” means that motor vehicles and parts are excluded from the data.

Home values are increasing in many parts of the country and household net worths are rising, too. Therefore, we can infer from the Retail Sales report that U.S. consumers are starting to feel better about their individual finances, and about the economy overall. 

To homebuyers and rate shoppers, strong Retail Sales data may foreshadow higher mortgages ahead.  This is because sales data is a by-product of consumer spending and consumer spending accounts for more than two-thirds of the economy.

As spending increases, the economy tends to expand, drawing investment dollars into stock markets and away from bond markets - including mortgage-backed bonds, the basis for conforming mortgage rates. 

Less bond demand leads to higher rates and, therefore, lower levels of home affordability.

Despite the Holiday Season momentum, however, 2009 will likely mark just the second time that Retail Sales data fell year-over-year since the government started tracking it 40 years ago.  The other year was 2008.

But, if November’s Retail Sales is a reliable indicator of consumer sentiment overall, we should expect 2010 to rebound strongly.  And when it does, mortgage rates should suffer.

The housing market is recovering, mortgage rates are still near all-time lows, and the government is offering an $8,000 tax credit to qualified buyers through April 30, 2010.  If you plan to buy a home next spring, you may want to consider moving up your timeframe.  Waiting may be costly.

Need more expert advice? Ask the team of Certified Mortgage Planning Specialists at Benchmark Mortgage.

Retail Sales

When Ben Speaks, Mortgage Rate Shoppers Need to Listen

On the 1-year anniversary of the Lehman Brothers collapse, Fed Chairman Ben Bernanke said Tuesday that the “recession is very likely over at this point”.  

His comments were supported by a Retail Sales report for August that was much better-than-expected.

Equities improved on the day, mortgage markets worsened, and home affordability suffered. 

The days of ultra-low mortgage rates may be coming to an end.

Since last September, mortgage bonds markets have been in Rally Mode.  As the Financial Crisis of 2008 worsened, investors fled the relatively risky world of stocks and moved dollars into safer investments like cash and bonds – including the mortgage-backed kind.

Risk aversion is common when market uncertainty exists but last year’s aversion was so strong that, by late-November, it had forced mortgage rates down to an all-time low. 

Since November, however, rates have been on the rise.  Stronger economic data and a general feeling of optimism have helped stock markets recover and some of those gains are coming at the expense of low mortgage rates.

Therefore, if you’re wondering what mortgage rates might do going forward, listen to the words of the Federal Reserve Chairman. If he sees economic recovery ahead, it’s probably going to happen.

It should spell higher mortgage rates into 2010.

Need more expert advice? Ask the team of Certified Mortgage Planning Specialists at Benchmark Mortgage.

Retail Sales

Why Mortgage Rates Were Up for the Third Day in a Row

Mortgage markets worsened for the third straight Tuesday after the government reported June’s Retail Sales report came in slightly better than expected.

Since falling to near 5.000 percent last week, 30-year fixed conforming mortgage rates have risen by almost 3/8.

It’s a similar mortgage rate pattern to what we’ve seen over the last 10 months — rates drift down to near their “all-time lows”, and then surge higher over just a few days time.

This week’s movement, in particular, is vexing home buyers and would-be refinancers. 

Many people thought mortgage rates would break below the 5.000 percent threshold.  The markets, however, had other ideas.

In addition to the unexpectedly strong Retail Sales data, last month’s Producer Price Index reported higher than expectations, too. 

A rising PPI is important to rate shoppers because the figure is akin to the Cost of Living measurement for household, but for American businesses instead.  The thought goes that if business costs are rising, consumer costs will eventually rise, too, as businesses share their expenses with American households.

This is inflationary, of course, and inflation is awful for mortgage rates.  It’s part of the reason why mortgage rates closed higher again Tuesday.

All year long, mortgage rates have been jumpy and unpredictable.  This past week has been no different and it’s why you shouldn’t necessarily try to time for a market bottom with mortgage rates. 

If an interest rate looks good to you today and the payment is manageable, consider locking it in.  There’s no guarantee rates will ever fall back toward 5.

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