Retail Sales Drop; Corporate Profits Through the Roof – Daily Mortgage Rate Update for July 14th, 2010
Retail sales off 0.5%, but up 0.1% net of autos and lower gasoline prices; Intel reports biggest profit in a decade – Daily Mortgage Rate Update for July 14th, 2010
Retail sales fell more sharply than expected in June, as consumers stayed far away from car lots, and the fall in gasoline prices reduced the total dollar amount of sales at the pump. Retail sales results are seen as indicative of what may be coming in future quarters’ economic growth, as consumer spending generally accounts for roughly 70% of GDP. Remember that June was the last month in the 2nd quarter, and that we will get the advanced reading on 2nd quarter GDP growth at the end of this month, and it becomes clear why traders on Wall St. are nervous about these results.
As corporate earnings season continues, chip maker Intel reported its largest profit in the last ten years, as corporate spending on new computers increased. During the economic downturn, many companies had chosen to get by on computers 2, 3 or 4 years old, but Intel’s results suggest that companies are spending a little more freely on technology and equipment. Looking at this report in conjunction with what we learned yesterday about results at Alcoa and CSX, it suggests that businesses may continue to grow throughout this year, and that could lead to more private sector hiring as the year continues. The economy is in desperate need of private sector jobs to replace the 7 million + jobs lost during the economic crisis.
Mortgage applications for new home purchases fell to their lowest level in 13 years, as the real estate market continues to cope with life after the expiration of the first-time home buyer tax credit. This isn’t surprising, though; many buyers who would have preferred to have bought in June or July accelerated their purchases to take advantage of the credit.
You would think that the decline in demand might be hurting home prices, but, in some states, though, home prices are posting healthy gains in recent months. According to First American Core Logic, home prices in Rhode Island and Massachusetts increased by 5.5% and 5.7% respectively year-over-year in May. This is seen as having two main drivers: the influence of the tax credit; and increases in prices buyers are willing to pay for distressed properties. Core Logic chief economist Mark Fleming did express some concern that the trend might moderate or reverse later in the year as home buying demand mellows.
Mortgage pricing has opened sharply better this morning on concerns about continued economic growth. Most rates cost about 3/8 point less than they did yesterday, however, there is still a lot of risk in the market at this time. I cannot recommend floating during the remainder of this week, as we have very significant numbers coming tomorrow and Friday in the form of the Producer and Consumer Price indexes. Still, it is a little bit safer to float than it was yesterday, but you should still consider locking in most circumstances. Ultimately, this morning’s pricing is really just lucky.
As a final note condolences to the Steinbrenner family on the passing of George Steinbrenner yesterday. Here’s a couple of interesting statistics about his legacy with the New York Yankees:
Number of World Series Pennants under Steinbrenner: 7
Average annual payroll increase from 1994-2006: 13.5%, ending at $195,000,000
Estate tax the Steinbrenner family will pay: $0, as 2010 is the year of no estate tax.
If you have questions regarding Rhode Island Refinance Rates, or whether or not to lock your loan, please don’t hesitate to contact me by cell at (401) 263-8655, or by commenting on this post. Have a great day!
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Dan Hartman is a Senior Mortgage Advisor with Province Mortgage Associates, and serves as an Adjunct Professor of Finance and Economics at Roger Williams University and the University of New Haven. He has been helping homeowners and homebuyers with their mortgage questions for over 10 years.
July 14, 2010 by Dan Hartman · 2 Comments
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I have worked as a residential mortgage advisor since February of 2000 and a part of the founding team here at Province Mortgage. We believe that by doing right by a family today, we can create a relationship for life, and, hopefully, and ambassador who will share the experience with others. It is our team of professionals that helps us to create this experience.
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