Consumer Confidence is rising!!!!

Consumer Confidence, which measures how optimistic or pessimistic consumers are with respect to the economy in the near future, hit a five-year high in May, coming in at 76.2. The Consumer Sentiment Index, a similar measure, also came in above expectations for May.




There was also good news on the housing front, as the Case Shiller 20-city Home Price Index rose 10.9 percent year-over-year. This was above expectations and the best annual gain in seven years. In addition, the second estimate for first quarter Gross Domestic Product (GDP) rose by 2.4 percent. By comparison, the final reading of GDP for the fourth quarter of 2012 was 0.4 percent. GDP is an important measure of productivity growth and a key indicator of economic strength.



In inflation news, the Personal Consumption Expenditures (PCE), the Fed's favorite measure of inflation, shows that inflation remains tame. In fact, the year-over-year core PCE (which excludes volatile food and energy measurements) is running at 1.1 percent, well below the Fed's upper end target of 2 percent and just above the all-time low.



What does all of this mean for home loan rates? Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates (which are tied to Mortgage Bonds) improve. Strong economic news often has the opposite result. With several strong economic reports released last week, Bonds and home loan rates felt the impact.



However, helping Bonds and home loan rates is the fact that inflation remains non-existent, as inflation reduces the value of fixed investments like Bonds. A big question moving forward is: Will the Fed continue its Bond purchase program known as Quantitative Easing? While low inflation gives the Fed cover to do so, there are growing opinions that the program should come to an end.



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. Let me know if I can answer any questions at all for you or your clients.

Richard Williams

407-310-3609

Richard.Williams@carringtonms.com

Mortgage rates are trending upward * Article from the Washington Post 5-23-13

Mortgage rates moved higher for the third week in a row, according to the latest data released by Freddie Mac.
The 30-year fixed-rate average jumped to 3.59 percent with an average 0.7 point. It was up from 3.51 percent last week but down from 3.78 percent a year ago. Until last week, the 30-year fixed rate had remained below 3.5 percent for more than a month.
The 15-year fixed-rate average climbed to 2.77 percent with an average 0.7 point. It was 2.69 percent a week ago and 3.04 percent a year ago. Despite the increase, the 15-year fixed rate has not been above 3 percent in nearly a year.

Hybrid adjustable rate mortgages held steady. The five-year ARM edged up to 2.63 percent with an average 0.5 point. It was 2.62 percent a week ago. The one-year ARM remained the same as a week ago at 2.55 percent with an average 0.4 point.
“While [higher rates] may slow some of the refinance momentum, rates are nonetheless low and home-buyer affordability high, which should further aid home sales and construction in coming weeks,” Frank E. Nothaft, Freddie Mac vice president and chief economist, said in a statement. “For instance, in April, single family housing permits rose to the strongest pace since May 2008 while existing home sales for the same month grew the most since November 2009. Moreover, the National Association of Realtors reported that the median number of days on the market for these sales fell from 62 to 46 days, the fewest since it began collecting the data in May 2011.”