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Consumer sentiment hurt by gov’t shutdown

Posted by Mehran Aram on Tue, Feb 5, 2019 @ 15:02 PM

The partial government shutdown over the holidays and into the near year weighed heavily on American households’ sentiment of the economy. The University of Michigan’s consumer sentiment index was 91.2 in January, down from a reading of 98.3 at the end of last year. This marks the weakest sentiment figure recorded since October 2016.

Partisan turmoil in Washington is being blamed for the decline and concerns are growing about further declines in the coming months if there is another stalemate that leads to a second shutdown. Concerns that the longest government shutdown in U.S. history would have a significant impact on consumer confidence appear to have been lessoned by a stronger than expected economic data for December including the most recent employment report.

Longer term, consumer sentiment has steadily increased over the past couple of years as low unemployment and strong economic growth boosted confidence. Recent drops in mortgage rates may also boost how consumers feel about the long-term economy.

Today, conforming no-point 30-year fixed mortgage rates are averaging 4.375 percent, 15-year rates are near 3.75 percent and the 5-year ARM is averaging 4.25 percent.

Do you have a question for Real Estate & Mortgage Analyst Mehran Aram? Submit your queries about a home purchase, refinance, or reverse mortgage via Aramco.Biz, social media (#AramcoReport), or over the phone at (866) 381-8888 and your questions may be featured in an upcoming article.

Topics: Mortgage rates, University of Michigan, Consumer Sentiment, Government Shutdown

ARAMCO Report - Thursday May , 2015

Posted by The Aramco Group on Thu, May 14, 2015 @ 15:05 PM

Increasing consumer sentiment spurred more refinances than home purchases 

Consumer sentiment levels have been a more important predictor of mortgage application volume than fluctuations in mortgage interest rates have been over the last 12 months. The indexes for both consumer sentiment and for mortgage application activity have very closely mirrored each other between April 2014 and April 2015 according to the University of Michigan and RealtyTrac respectively. Both indexes retrenched during the first quarter of 2015, and both are up over the last 12 months — by very similar amounts both times.

Average mortgage interest rates have persistently fluctuated near all-time lows (between 3.35 – 4.34 percent) since August 2011. That infers that low interest rates were a precondition of increased mortgage application activity but not their specific cause.

Interestingly the increase has mostly gone to refinance applications instead of to purchase applications. That implies that current levels of consumer sentiment are high enough for people to think that the closing costs associated with a refinance are a worthwhile investment, but that they are not yet high enough to cause a robust spring home buying season.

Potential refinancers will find conforming no point 30-year fixed mortgage rates average 3.875 percent while 15-year rates average 3.125 percent. 

For more information on a home purchase, refinance, or a reverse mortgage, visit our website at Aramco.Biz or call me at (877) 700-0942. This is Mehran Aram with today's ARAMCO Report.

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Topics: 30 year fixed rates, Mortgage applications, Consumer Sentiment