Economic Update

The University of Michigan posted their Index of Consumer Sentiment late this morning, announcing a reading of 70.2. This was a sizable increase from the August final reading and higher than what analysts had expected. This means that consumers are more optimistic about their own financial situations than many had thought. That can be considered bad news for mortgage rates because it hints that consumers are more apt to make large purchases in the near future. However, it appears the data is of no concern to traders at this time.

The drop in mortgage rates today can partly be attributed to a good Treasury Auction yesterday. The willingness of global investors to purchase huge amounts of US debt speaks to the lack of alternatives available in the current low interest rate environment around the globe. If interest rates around the world begin to move higher it may offer investors a more attractive place to put their money, which would force the US to offer higher rates on our Treasuries to compete. When this happens it will cause long term mortgage rates to rise as a result.

This week brings us the release of several important reports including two key inflation readings and an extremely important measurement of consumer spending.

Rates are approaching historical lows once again making this an amazing time to purchase or refinance a home!

~ Courtesy of Wendy Charles, LoanCentral LLC, 425.468.9321, WendyC@LoanCentral.com