Up until the last few weeks, Orion’s pricing was unusually stable, and had been for months. Sure there was a little up and down movement, but nothing major. This is a good thing for Orion’s brokers and their clients. But our brokers continue to educate your clients about mortgage rates, and the U.S. economy in general, because brokers believe that it is important for valued clients to understand what could move interest rates during their lock period, and also in the future. With that in mind we took a look at the economic news last week from the United States to see what is happening and to educate our clients.
The latest U.S. economic data as we head into the last full week of February continues to be a mixed bag, with positives and negatives, but with one huge event. Orion’s headquarters are in Texas, and the economy in Texas, which accounts for roughly 10 percent of GDP, saw widespread shutdowns due to loss of power, water, impassable roads, and both residential and commercial flooding from burst pipes. This was following a winter storm that garnered attention across the nation and crippled much of the state last week. This will likely impact data over the first quarter as supply chain disruptions will be felt nationwide, but there will be little disruption to employment.
Turning to last week’s scheduled data that was released, retail sales spiked 5.3 percent in January as the $900 billion stimulus made its way into the economy. While January saw increases in spending on discretionary items such as autos, furniture and electronics, the winter recent winter storms may leave many consumers to pivot spending to increased utility payments in February. Wholesale energy prices drove producer prices up 1.3 percent in January and are expected to continue their rise in February. The impact on mortgage of this was minimal.
As we move towards spring, however, the year over year gains are expected to show larger increases due to both the weakness from last year as well as firming prices this year. Expectations for higher inflation have increased yields in both Treasuries and MBS and mortgage rates are continuing to trend higher. Indeed, mortgage rates for you clients have moved higher not due to current inflation or economic news, but instead the belief that the U.S. economy will shift into a higher gear.