Mortgage interest rates improved slightly on the week despite limited economic data. Of note, December Factory Orders, the January ISM Services Sector Index, weekly jobless claims, and December Wholesale Inventories were slightly weaker than expected. December Consumer Credit increased more than expected but revolving credit actually fell $3.6 billion. The U.S. trade deficit in December was smaller than expected at -$38.5 billion largely driven by record exports of petroleum. Also, Q4 productivity was revised lower than expected and as a result unit labor costs increased more than expected. On March 1st, automatic spending cuts of $85 billion are scheduled to take place so markets will monitor negotiations between the President and Congress to avert those cuts. St. Louis Fed President Bullard said that he expects economic growth to gain momentum this year which will let the Federal Reserve start to curtail the pace of bond purchases as early as mid-year.
Long-term rates slid back a bit this week, the 10-year T-note holding 2.00%, mortgages near 3.75%, higher than 2012 second-half, but nothing dramatic. It was a thin week for data, but two reports were startling. First, the US trade deficit in December arrived 20% lower than forecast because of a surge in exports of… oil. Second, consumer credit continued its rise: a $15.9 billion jump in November, and $14.6 billion in December. The usual suspects have seized on this run as a sign of normal, cyclical recovery ahead, and it is not. The only two components growing: student loans and car paper, one crushing the next generation, the other available only because it's the only consumer collateral that's easy to repossess. All other categories of consumer credit are falling, from credit cards to mortgages.
Mortgage interest rates have increased slightly over the past month. Currently, a Conventional 30 year fixed rate is hovering around 3.75% with no points.
** Mortgage rates are subject to daily market fluctuations and can change without notice. Mortgage rates are also effected by down payment, credit score and property type.
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