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CCL Market Update: Holiday Sales, Housing, Loan Programs, Mortgage Rates

This week, the Retail Sales report exhibited the biggest increase since 2011. Sales this holiday season rose 4% from one year ago. Additionally, non-store holiday sales (online and e-commerce sales) rose 6.8% this season. Despite the favorable increase overall, December saw a slowing in consumer spending. However, the National Retail Federation is pleased with the increase in total holiday sales in 2013, and believes that consumers will continue to reap the benefits of an improved job market and low gas prices.

Investors continue to be concerned about the dropping oil prices creating a potentially deflationary environment.  Periods of deflation typically result in falling prices, job losses, and slow growth or depression.  Fueling these concerns was Thursday’s Consumer Price Index (CPI) showing prices declined 0.4% in December following a 0.3% decline in November.  The Federal Reserve target range for CPI is 1.5% to 2.0% annual growth.  These recent readings signal that the Fed will be in no hurry to raise interest rates.

Jobless claims rose from 297,000 in September to 316,000 in the week of January 10, making an increase of 19,000. It is typical for companies to let go of seasonal workers at the beginning of January, but the numbers indicate that there was a higher-than-usual number of firings this year. However, unemployment is still down from previous years, and economists are reporting that the labor market is fine.

The housing market in the U.S. is still on the up-and-up!  According to Trulia, housing is about 75% recovered in total, and the sales and prices of existing homes have contributed the most to the improving numbers. The involvement of the millennial generation (25- to 34-year-olds) is the slowest to recover, as it is only 46% back to normal levels.

Next week begins with a bank holiday on Monday to celebrate Martin Luther King Jr. Day.  Economic news is relatively light for the remainder of the week with only a few housing related reports expected to show continued price and sales gains.


Loan Program News

President Obama said Wednesday that the Federal Housing Administration (FHA) will be lowering its annual insurance premiums. As a part of the president’s efforts to “expand responsible lending to creditworthy borrowers,” the FHA will be dropping premiums from 1.35% to 0.85%. Lower insurance premiums should benefit the housing market by bringing more first-time buyers into the fold.

To learn more about options for first-time buyers, visit our FAQ section.


Mortgage Rate News

Mortgage rates are continuing to steadily decrease this week. The 30-year fixed dropped from 3.750% (3.766% APR) to 3.500% (3.570% APR) and the 30-year manufactured went from 3.750% (3.930% APR) to 3.625% (3.688% APR) between January 12 and 15. That’s a nice drop for only one week!

Freddie Mac has a weekly survey that tracks general rate movement across various lenders. The survey results for a 30-year fixed loan are portrayed in the graph blow:



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Written by Central Coast Lending - Go to Central Coast Lending's Website/Profile