Mortgage Rates a Little Higher on Economic “Green Shoots”
Mortgages rates are a little higher this week, thanks in part to optimism over economic “green shoots“. However, it remains to be seen whether or not rates will keep climbing. Indications are that celebration over these tentative signs of possible and imminent economic recovery are a bit premature. This means that mortgage rates might possibly fall back as economic news continues to point to the possibility that a bottom may not have been reached yet.
Retail sales data and the economy
April retail sales data was reported earlier this week, and things are not looking particularly good. Economists has expected a slight gain for retail sales, and were instead faced with a drop. This indicates that consumer spending, a staple of the U.S. economy, is not really recovering. Consumers are not terribly interested in buying goods; they are more concerned with saving money and shoring up their personal finances.
Jobless data resumes its weakness
After jobless data dropped last week, showing slowing unemployment rates, it has resumed its climb this week. Jobless claims jumped this week, adding to the speculation that the “green shoots” of economic recovery probably are not very reliable. New unemployment claims are up on the week, and the moving average of continuing unemployment remains a problem.
With these issues pointing to continued recession, it is little surprise that mortgage rates remain at record lows. After all, even though they have ticked upward, mortgage rates still remain below 5%, offering an excellent buying opportunity. And it is possible that next week mortgage rates will fall back down. With the recession still firmly in place, rates should not be rising dramatically any time in the immediate future. It is quite likely (though by no means certain), that mortgage rates will remain low for the coming few months. While they will probably fluctuate, they are likely to remain within + or - 25 points of 5%.
