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Real Estate Chart of the Day
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Mortgage rates have been low because of a weak U.S. economy. The economy is strengthening now, though, so mortgage rates are rising.
Mortgage rates tend to climb with the mercury. It's been the case in each of the last 3 years. As spring months turn into summer, the average 30-year fixed mortgage rate rises. This year should be no different.
January's job report and retail sales report both went negative, and Pending Home Sales failed to impress. Furthermore, there's been a general softness about the economy and Fed members have gone silent on Fed Funds Rate matters. It's a reversal from December and expectations for 2010 are dialed back a bit. Mortgage rates are falling, but have likely bottomed out.
Many analysts believe that confidence correlates to spending. Looking at the trendline chart, they've got good reason -- there relationship between sales and confidence appears to be direct. But there's some analysis worth doing, too.
Consumer spending drives the economy. Without spending, there's no growth and, as a result, tepid retail sales reports force Wall Street to rethink its bets on U.S. economic recovery.It's a primary reason why rates return to 5 percent again and again. The economy is back from the brink -- banks are healthier, investment is returning, household net worth is up -- but consumers continue to stand en garde. Confidence is down.A recovery is not a recovery until consumers buy-in. Literally. And, right now, that's not happening.
