Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.
Monday, October 3, 2016
Last Week in Review:
New Home Sales fell 7.6 percent in August from July, the Commerce Department reported. The drop followed a stellar July and still landed well above expectations. From August 2015 through August 2016, sales rose a whopping 20.6 percent. There was also news on home prices: The S&P/Case-Shiller Home Price Index showed a 5.0 percent gain in the year ended in July, just below the 5.1 percent expected.
The economy as a whole continues to trudge along. Gross Domestic Product (GDP) is still running lower than what is considered healthy. The final reading on second quarter GDP rose to 1.4 percent from the earlier reading of 1.1 percent. By comparison, a reading of 2.5 to 3 percent is considered optimal. GDP measures the pace of economic activity and represents the total dollar value of all goods and services produced over a specific time period. It has averaged 2 percent since the recession ended in mid-2009 and reached 2.6 percent in the second quarter of 2015.
The inflation gauge, Core Personal Consumption Expenditures (PCE), rose 1.7 percent from August 2015 through August 2016, below the 2 percent target. Core PCE measures the change in prices of goods and services purchased by consumers throughout the economy, excluding volatile food and energy. Upticks in inflation can reduce the value of fixed investments like Mortgage Backed Securities, and hurt the home loan rates that are tied to them. While inflation is still below the Fed’s target range, it will be important to watch for any future increases.
However, consumers are feeling optimistic, according to the Conference Board. Its Consumer Confidence Index soared to 104.1 in September, the highest level since before the recession began in 2008.
If you or anyone you know is in the market to invest in a new or existing home right now, home loan rates are quite attractive, hovering in historically low territory.
The bottom line is that home loan rates remain near historic lows, and now is a great time to consider a home purchase or refinance. Let me know if I can answer any questions at all for you or your clients.
- National manufacturing data from the ISM Index will be released on Monday followed by the ISM Services Index on Wednesday.
- Employment data starts with the Wednesday release of the ADP National Employment Report, followed by weekly Initial Jobless Claims Thursday.
- The September Jobs Report releases Friday and includes Non-farm Payrolls, the Unemployment Rate and Hourly Earnings.
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.
The bottom line is that home loan rates remain near some of their best levels, and now is a great time to consider a home purchase or refinance.
The opinions expressed above are those of Derek McClintock and not C2 Financial Corporation NMLS# 135622 | CA BRE # 01821025. Rates change every day and sometimes many times throughout the day. For your current mortgage situation, please contact Derek directly and he will help you price out your home loan rate for that particular day at that particular time.
