Bay Area Mortgage Rates Surge On May Retail Sales Figures

Retail Sales historyThe jobs market is recovering slower than expected, and so is housing. But neither condition has slowed U.S. consumers. According to the Census Bureau, Retail Sales rose for the 11th straight month in May. Excluding cars and auto parts, sales receipts climbed to $322 billion last month. It’s an all-time high and another example of the U.S. economy’s resiliency.

Wall Street Moves to Stocks

Wall Street didn’t expect such results. As a result, mortgage rates worsened Tuesday.

By a lot.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.

The connection between Retail Sales and mortgage rates can be fairly tight in a recovering economy. Retail Sales accounts for almost half of all U.S. consumer spending, and nearly one-third of the economy overall. The May report, therefore, showed the economy may be on more solid footing than economists expect.

Plus, lately, as the economy goes, so go mortgage rates in Pleasanton and nationwide.

When the economy has shown signs of life, mortgage rates have increased. When the economy has shown signs of a slowdown, mortgage rates have dropped.

Interest Rate Volatility High

It’s why mortgage markets reacted the way they did Tuesday; May’s Retail Sales data was strong. The resultant surge in conforming mortgage rates — from market open to market close — turned into one of the year’s fiercest, raising average mortgage rates well off their 7-month lows established earlier this week.

At today’s rates, each 0.125 percent change in rates yields a payment difference of $7.50 per $100,000 borrowed. Yesterday, some product rates rose by as much as 0.250 percent. It put a dent in home affordability and household budgets.

Lock Your Mortgage Rate Before It Changes (Again)

When the markets have such volatility in them that any news can shift the market like this I recommend not sleeping on an interest rate. Have a plan in place. I love to work with readers that find my information on the Mortgage and Housing Market helpful in your decision making process. As a Mortgage Planner at Vintage Mortgage Group in Pleasanton I am in a unique position to help you capitalize at any point in the market. Contact me below today to help you with your purchase or refinance.

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