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

    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

    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

    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

    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.

Share This Page