Economic News Affect Mortgage Rates

Economic News Affect Mortgage Rates And Demand For Homes

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This Article Is About Economic News Affect Mortgage Rates And Demand For Homes.

Breaking News on Consumer Price Index Indicates inflation on the rise:

The consumer price index skyrocketed to 5.4% since August 2020. This is the biggest increase in the CPI since August 2008 which is the time of the Great Real Estate and Financial Meltdown and Recession.  Inflation has jumped to recent record levels in June 2021 and is expected to soar in the coming months.

June’s inflation rates have been recorded as the highest-paced rate in the past 13 years. Many consumers are beginning to notice soaring gas and food prices since Joe Biden and Kamala Harris has taken office. Experts and analysts had been forecasting a 5% CPI gain. However, the 5.4% gain came in at a higher than expected forecast.

Homebuyers and homeowners should definitely take advantage of today’s low rates. High inflation means higher rates are in the forecast.

Homeowners Should Rush and Think About Refinancing Their Home Mortgages Cho Associates-MortgageBankers

When the economy is good, mortgage rates are higher and bad for the mortgage industry. Whenever the government reports a good employment announcement report, it is bad for mortgage rates. The stock market is a different story.

If there are good economic numbers released, the stock market rises, which is great for investors. Good economic data fuels the stock market. Good employment numbers will boost the stock market. The opposite is true for mortgages. Good news means higher interest rates which yield bad news for mortgage rates and the mortgage industry.

In this article, we will discuss and cover how economic news affects mortgage rates. This article is an update to an older article from Gustan Cho Associates. The paragraphs below are content from an older article from July 19th, 2019.

Employment Data Economic News Affect Mortgage Rates

Recent employment data reports that the United States has added 257,000 jobs in August 2018:

Employment data for July and August 2019 has been changed to reflect a sharp increase. The economic news also reported that employee wages has increased as well. Private sector hourly average wages for U.S. workers have also increased by 0.50% from December 2018 figures.

Recent employment figures show that the past three months have been a record-breaking record when it comes to employment gains in the United States in 18 years.

 Recent Oil Rally

The recent oil rally in the past several weeks has been the largest oil rally since 1998.

  • Economists and analysts were extremely concerned that the constant drop in oil prices week after week was going to damage the economy of the United States and have inflation at very low levers
  • An immediate 180-degree turnaround has the bond market in full gear and market analysts and industry experts
  • Economists are expecting an inflation rate annually of 1.49% for the next five years
  • The adjustment was just made of the 1.49%
  • Just a little over a month ago, the figure was 1.07%

Announcement From The Federal Reserve Board

The Federal Reserve Board is predicting that rates will be going up in the second half of this year.  Other industry analysts and economists, as well as Wall Street experts, agree that the Federal Reserve Board will be increasing rates starting the second half of this year.

2020 Outlook On Economic News Affect Mortgage Rates

2020 Outlook On Economic News Affect Mortgage Rates

The combination of great economic news, rally on oil prices, and the Federal Reserve Board planning on increasing mortgage rates is a deadly combination for mortgage rates:

  • The likelihood of mortgage rates increasing is inevitable in the second half of 2018
  • Unless there is drastic bad economic news, mortgage rates will go up
  • Great economic news and a stock market that will not correct means that it is bad news for U.S. Treasuries as well as Mortgage Bonds
  • This signals mortgage rates will be going up

A recent survey from Bloomberg predicts 10 year U.S. Treasuries to spike up to 2.71% from the current 1.93%. This means that mortgage rates are on an upward swing.

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