As mentioned before, this week’s release of the Retail Sales numbers has sent rates to their highest point since 2007. The “fear” in the numbers is that retail sales came in much higher than expected prompting our “Warriors of Wall Street” to push mortgage rates to higher levels in anticipation that the FED may continue their rate hikes in an effort to slow down the economy which will get inflation under control. On the surface, this would all make sense except for the fact that we live in different times than what they were taught years ago in their economic classes. Sometimes you have to look at all of the facts to determine whether what you are looking at really makes sense. My point is that while retail sales may have grown, it is not because the average consumer has extra money in their pockets from making more money and that the economy is doing well. We also know that the unemployment rate continues to rise and that more people are working more than one job than any time in our Country’s history. The reason that the average consumer is spending more and more money is that they are not spending their money that they earned…kind of like the US Government who when they run out of money they simply print more…they are mastering the possibilities with “MasterCard” or any other credit card they can get their hands on. Credit Card debt in this Country has risen to record levels and has now breached the $1 Trillion mark.
So, is our economy really doing well given what the retail sales numbers show? Or, are we simply printing more and more money via the use of credit cards? I would say the latter and that is not good in the long run as trying to pay off that debt has also become harder as the average rate on credit cards is now over 20% and that is even for folks with good credit. I will say that I am fascinated how folks complain about 7.5% 30 year fixed rates but they will not hesitate spending thousands of dollars on a credit card at 22% interest. Then let’s throw in the millions of Americans who have student loan debt and most of them have not made a single payment on these loans in over 3 years but are having to start paying starting this month. This is shaping up to be a real “train wreck” in the long term and our “Warriors of Wall Street” can’t see it coming. What have they done as well as our friends at the Federal Reserve…continue to push rates higher and higher. Between Wall Street and The Federal Reserve, they have pushed housing affordability to its worse levels since 1989. Housing prices have risen by over 35% since COVID coupled with the highest mortgage rates in over 20 years. This will most likely only speed up the eventual crash. The good news to this gloom and doom report is that rates will begin to come down once they realize that things are not quite as rosy as they think it is and that they have basically placed our economy in a not so good place. In the meantime, the average American will continue to purchase items they do not have money to pay for, but who needs money? I have a credit card.
Remember… The BEST RATE… IS A LOCKED RATE… with a float down… ask me about our program that allows you to lock your rate and then float down if rates move lower.
Make sure you (or your buyer) get pre-approved before looking at homes so we can determine if you are looking in the correct price range and have you armed to submit an offer with a pre-approval letter!
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Blog post date: Friday, October 20, 2023