How Do Retail Sales Affect Mortgage Rates?

Discussion in 'North America Real Estate' started by Ryan M, Nov 7, 2012.

  1. Ryan M

    Ryan M New Member

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    The retail sales statistics are one of the tools that banks use to get a pulse of the economy. If the American people are buying more things, it can be assumed that the economy is improving.

    The banks see the boost in retail sales as a boost in demand (in this case, a demand for new things in general, including new houses). And, mortgage lenders -- just like any other business -- live and die by supply and demand. The higher the demand for their product, the more they can charge for it.

    Does this mean we are likely to see a rise in mortgage rates as we approach holiday season and into early next year?
     
  2. Drew Drew

    Drew Drew New Member

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    Actually, banks in the US price mortgages with only two factors in mind:

    1) What mortgage-backed securities are selling for on Wall Street.
    2) Their own internal supply/demand (they raise rates to slow applications).

    Wall Street traders look at retail sales when bidding on mortgage-backed securities.
     
  3. LucasAtwell

    LucasAtwell New Member

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    A few other factors of note made a difference in mortgage rates:

    • Continued Jobless Claims dropped to the lowest level since July 2008
    • Empire State manufacturing jumped to the highest level since May
    • The Fed’s Yellen expressed support for easy-money policies to help the job market
    • Gold prices declined below $1,610 per ounce to the lowest level in six months
     
  4. AlexMiller

    AlexMiller New Member

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    Homes are affordable like never before. Low mortgage rates had been the major contributing factor for this, says NAR. However, it is indeed a fact that mortgage rates are higher by 1/4 % since the retail sales data was released.
     
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