What goes up sometimes comes down, and that’s what happened over this last week with mortgage rates as we saw Treasury yields decline. According to the weekly mortgage rate survey published by Freddie Mac, average mortgage rates had the latest one-week drop since last November, which is great news for home buyers.
As we know, it’s going to take a sustained improvement to loosen up the housing market and increase affordability, but we’ll take what we can get, right?! Freddie Mac also reported that household debt continues to rise due to credit card and student loan balances.
If you find yourself in this boat, you’re not alone, and taking out equity from your home may give you some relief from the higher-interest debt that plagues many households. Yes, mortgage rates are higher than a couple years ago, but they’re almost always much lower than interest rates on consumer debt.
What brought on this improvement in rates? As you know, inflation data has been the biggest market mover, so when the Consumer Price Index was released this week, showing the increase in consumer inflation lower than expected, it sparked one of the biggest single-day bond market rallies since last year.
How long will this environment last? No one knows. There are some reports coming out that could make it hard for improvement to stick – more on that in a bit. But for now, we’re enjoying the ride. This rally acts as a great reminder that if you are considering a purchase or refinance in the near future, please let me know. I can keep an eye out for these improvements in rates and help you take advantage of them.
As for what I’m watching this week…
Still, to come this week, we have some more highly influential inflation data. The Producer Price Index (PPI) will give us a peek at wholesale inflation. There’s also Retail Sales numbers that are an important gauge of the economy, as two-thirds of our economy is driven by consumer sales. Traders and analysts will be watching for confirmation of the CPI or the reverse to make their moves.
Producer prices in October are expected to edge 0.1 percent higher on the month versus a 0.5 percent increase in September. The annual rate in October is seen at 2.0 percent versus September’s 2.2 percent increase.
As for Retail Sales, October sales are expected to fall 0.3 percent following September’s strong 0.7 percent rise. That would be the first month-over-month drop since the 0.9 percent slump in March.
