If we raise interest rates prematurely and cause the economy to go into recession, that's not going to be the environment where people can make a good return on their retirement funds or other investments.
(PRWEB) July 21, 2012
The weekly Homes.org mortgage rate report outlines the most important economic news effecting interest rates over the last seven days. News last week of the stalling U.S. economy pushed rates downward even further to brand new record lows. This week both the 15-year fixed rate mortgage rates and 30-year fixed rate mortgages dropped 1 basis point.
Current mortgage interest rates are:
3.78% - average rate for a 30-year fixed rate mortgage
3.04% - average rate for a 15-year fixed rate mortgage
The global economic slowdown, including here in the U.S., played a large part in significantly lowering rates last week. The Fed even hinted that they may take additional measures to boost borrowing and economic activity to help keep the looming double-dip recession at bay.
This week there were a number of significant economic report and events. Below is an overview of this week's most important economic activity.
- Monday: June Retail Sales
- Tuesday: Consumer Price Index (CPI) report
- Tuesday: Fed Chairman’s testimony on the state of the economy
- Wednesday: June Housing Starts report
- Thursday: June Existing Home Sales report
Despite analysts prediction of a 0.2% rise in the June retail sales there was actually a 0.5% drop. Given the importance of consumer spending in this country, having a decline in retail sales three months in a row is an indicator that the economic boom of Q1 definitely didn’t continue into Q2.
The June Existing Home Sales report offered better news. NAR analysts found that the May trends of rising prices and falling sales due to reduced inventories continued into June. While there were less sales the increased prices translate into more personal wealth for homeowners. More promising news was in the June Housing Starts report. Homebuilders are feeling optimistic and it’s not hard to see why after data released by the shows there were 760,000 starts in June. An increase of 6.9%, which was 2% better than expected.
Even thought the housing market is showing signs of recovery, Fed Chairman Ben Bernanke’s testimony on the economy hit on the fact that the economy is slowing down in many segments. Because of the slow down Bernanke made it clear that they weren’t going to be raising rates anytime soon. “If we raise interest rates prematurely and cause the economy to go into recession, that's not going to be the environment where people can make a good return on their retirement funds or other investments.”
Based on the Fed Chairman’s statements, it’s save to say that mortgage interest rates won’t be increasing significantly anytime soon. The Homes.org mortgage team is forecasting that rates will either hold steady or possibly drop a point or two next week.
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