Florida Mortgage Market Weekly Report: The Week Ahead May 18, 2009

Florida Mortgage - Retail Sales Numbers for April 2009 Worse Than Expected After a really awful beginning for the month of May, mortgage markets got better last week, resulting in lower overall mortgage rates. This drop represented the first we’ve seen since late-April.

Poor Retail Sales Numbers Equal Better Mortgage Rates

As we’ve referenced often on this blog, when the economy gets shaky – specifically where things like retail sales numbers are concerned.

Retail Sales reported more poorly than expected, as did Initial Jobless claims. What we can see from these two reporting areas is that the US economy may not be recovering as quickly as investors benefiting from recent stock market improvements had wanted to believe. When money retreats from riskier investments like stocks and moves into safer investments like mortgage bonds – mortgage rates improve.

Add into this scenario the fact that US gasoline prices have rocketed upward by more than 10 percent over the last 3 weeks, it’s clear that consumers will be holding on to their wallets a bit tighter as we move into the summer – a condition perhaps lasting until the fall of 2009.

How Consumer Spending Impacts Mortgage Rates

Consumer spending is important because it comprises nearly two-thirds of the US economy. When US consumer spending slows down, the economy becomes less likely to rise out from under the our present recession as quickly as we would hope.

Though this sounds like – and is – bad news for the economy in general, the overall impact is good for mortgage rates. Again, a slower economy forces investors out of stocks and into bonds, including the mortgage-backed kind. More mortgage bond demand leads to higher bond prices and, therefore, lower bond yields and mortgage rates.

The Week Ahead – The Calm Could Signify a Storm

Not much data to keep up with this week. Memorial Day will keep trading very light towards Thursday and Friday.

Don’t be fooled by this lack of activity into thinking that mortgage rates will stand firm. Actually, it’s during “calm” weeks like this that mortgage rates have shown a tendency to increase in volatility – making huge movements up or down. With little to no official announcements against which traders can make bets, each and every piece of news is a surprise.

If you’re shopping for good mortgage rates and find one that you consider a good deal, take some risk off the table by locking in this week.

Retail Sales Decline As Savings Increase (hsh.com)

I hope you found this post useful! As always, if you or anyone you know is in need of a local Florida mortgage broker, I’m your guy. Call me at 863-604-3019 or apply online for your Florida mortgage. We’ll keep you posted and let you know when it’s time to pull the trigger!

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