Mortgage rates decreased by five basis points last week according to the Freddie Mac Primary Mortgage Market Survey as of June 18th. Incoming data continues to reflect a resilient consumer, with retail sales improving and pending home sales strengthening, suggesting purchase demand is continuing to modestly improve.
Mortgage applications decreased 3.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending June 12th. “Last week’s CPI data showed that inflation continued to move higher, putting upward pressure on rates early in the week, but growing optimism regarding the opening of the Strait of Hormuz brought rates down again by the end of the week,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “The net impact reduced mortgage application activity, with both purchase and refinance application volume down for the week by 3 percent and 5 percent, respectively. Purchase applications continue to run modestly ahead of last year, with stronger growth in conventional purchase volume while government purchase volume remained subdued.”
Shoppers stepped up their spending in May and surpassed expectations as temperatures warmed and gasoline prices leveled off. Retail sales rose 0.9%, up from a revised 0.4% gain in April, according to Commerce Department data released Wednesday. Sales got a boost from generous government tax refunds in both April and May, though economists say that cash cushion is starting to fade. Economists point to healthy spending with increases that were broad-based. Business at clothing, accessory and furniture stores all posted sales gains and online sales rose 1.5%. “The stronger-than-forecast and broad-based gains in May retail sales show that consumers continued to spend strongly despite higher gasoline prices in the month,” said Nationwide Chief Economist Kathy Bostjancic.
Wednesday’s Federal Open Market Committee statement showed the Federal Reserve is entering a new era under Chairman Kevin Warsh. The statement released Wednesday contained around 130 words, down from figures above 300 recorded in recent meetings, according to a CNBC analysis of the releases. Warsh acknowledged a “difference” in the statement early in his first press conference as chair on Wednesday. He said there was no forward guidance, as it was “not well suited for the current policy conjuncture. It’s a bit shorter, a bit simpler and it dispenses with some older language,” Warsh said. “That statement just gives you the facts, as best we can judge it.”
