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The positive economy means two things

Could it be that we escaped from the government shutdown not only unscathed but better than we were before? It certainly appears that way.  

The positive economy means two things:

  1. Tapering QE at the December Fed meeting is back on the table
  2. Higher mortgage rates

Mortgage rates rise

Speaking of higher mortgage rates, according to the latest data, mortgage rates of all stripes rose last week:

  • 30-year: The overall average rate for 30-year fixed-rate mortgages (conforming, non-conforming and jumbo) increased by another eight basis points (0.08 percent) to 4.49 percent.
  • 15-year: The overall average rate for 15-year fixed-rate mortgages (conforming, non-conforming and jumbo) also saw a rise of eight basis points (0.08 percent) from the prior week’s value, increasing to 3.59 percent.
  • 5/1 ARM: The overall 5/1 Hybrid ARM moved by the least of the bunch, adding just four hundredths of a percentage point (0.04 percent) to 3.07 percent.

The economy improves

Here’s a few highlights and commentary of the economic improvement from last week:

GDP: Estimates for economic growth in the third quarter improved from 2.8 percent to 3.6 percent, marking the strongest quarter of growth since the first quarter of 2012.

Jobs: Figures released last week showed that 203,000 new people found jobs in November and the unemployment rate fell to 7 percent. This time, the decline in the unemployment rate didn’t come from a decline in the number of people looking for jobs. Instead, the decline this time came despite an increase in the number of people looking for work.

New-home sales: The sales of new homes increased 25.4 percent in October. While a great headline figure, the reality is that the 444,000 annualized rate of sales during the month was only on par with levels seen earlier this year, and that sales revived from very low levels over the summer when interest rates spiked, which had curtailed demand; mortgage rates since settled in October.

It’s about trust

All in all, the economy is leveling out and even improving in some areas. And the more this continues, the more consumers can trust the economy.

If folks can again begin to trust their economic situations and outlooks, can again start to trust that the economy won’t necessarily take away hard-won gains of jobs, performing investments, home equity and more, they will have the confidence to more fully engage the economy, helping to grow it. Without this confidence, we’ll no doubt slump back again.

This week …

Mortgage rates now are at about two-month highs, and judging from the light economic calendar out this week, mortgage rates should stay pretty steady.

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