Personal Spending Up, Consumer Confidence Surges, But is Case-Schiller Home Price Index Relevant? – Daily Mortgage Rate Update for August 31st, 2010
Consumers spend more in July as incomes rise; Consumer Confidence posts surprising gain; Timing of S&P / Case-Schiller HPI hurts its value as an economic indicator – Daily Mortgage Rate Update for August 30th, 2010
Markets learned yesterday that consumer income had increased 0.2% in July, leading to a 0.4% increase in spending, so this morning’s news that August Consumer Confidence rose where economists had predicted a decline may have been a little bit less of a surprise. Consumer opinion is used to gauge the likelihood of increases in consumer spending, which is responsible for 70% of economic activity in the US. Measured relative to a rating of 100 which is based on the level of confidence in 1985, current confidence levels are still very low historically. The most appropriate way to read today’s report is that consumers today view the economy as slightly better than they did last month, where economists had expected a slight worsening, but from either perspective, consumers’ outlook for the economy is still quite weak.
The June edition of the Standard & Poors / Case-Schiller Home Price Index was published today, showing that home prices increased by 1% in 20 analyzed metropolitan areas. Unfortunately, the delay between the aggregation of data for this index and its publication creates some doubt about the present relevance of this information. Keep in mind what was happening in housing markets in June: home buyers with contracts dated April 30th or thereabouts were scrambling to get closed prior to the June 30th expiration of the home buyer tax credit.
Since that June 30th deadline, and, really, since the April 30th deadline to enter a contract, activity in the housing market has cooled somewhat. How relevant is 60-day-old data to economic decisions today? If the lead time on the Case-Schiller index were somewhat more compressed, its value as a statistic might increase.
Mortgage pricing has swung wildly over the past 3 days. Initially, it appeared that Friday’s activity was a reaction to Fed Chairman Bernanke’s comments at the Jackson Hole Conference, however, yesterday’s almost complete rebound on almost no news brought question to that. Mortgage pricing today is again at an all time high, and may struggle to move any higher, leading to record low rates. I suspect that last week’s Freddie Mac survey rate of 4.36% may be bested once again this Thursday. When mortgage pricing is as high as it is, it is difficult not to take advantage of some recent gains. I would suggest though, that loans more than 30 days from closing not be locked yet. Loans 15 or fewer days to closing should strongly consider locking at this time as it is unlikely the next two weeks may offer further pricing improvements.
Tomorrow we get the first of the week’s employment data in the form of the ADP private payrolls report. With the substantial data still to come this week, There are a number of scenarios where it makes sense to lock today. 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. Have a great day!
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Weekly Recap for August 23th-27th
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.
August 31, 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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