5 key mortgage interest rate indicators
What should you look at when deciding
where interest rates are headed?
There are hundreds of different reports, charts
and news items released every quarter that can help. But Lynn Reaser,
chief economist at Bank of America Asset Management Group, says
the following ones are particularly useful for mortgage shoppers:
core Consumer Price Index -- The federal Bureau
of Labor Statistics releases this data every month. The core
index measures what consumers are paying for goods and services
at malls, grocery stores and other retail locations. Unlike the
overall CPI, it excludes food and energy prices, which can bounce
around enough each month to distort the overall price trend picture.
Buyers should pay attention to the report because it's one of
the most important indicators of inflation. High inflation equals
high interest rates. Low inflation allows interest rates to fall.
For the most recent core CPI data, click here.
Cost Index/Average Hourly Earnings -- These two data
sets are also put together by the BLS. The ECI comes out quarterly
while the Employment Situation report containing the earnings
figures comes out monthly. The ECI measures changes in employee
wages, salaries and benefits, while the AHE number shows how worker
wages are changing month to month. Both are important because
rapidly rising labor costs can force businesses to raise prices
to compensate, spurring inflation. For the most recent ECI data,
For the most recent AHE data, click here.
Domestic Product -- This report comes from the Bureau
of Economic Analysis, which releases an advance, preliminary
and final estimate of each quarter's GDP. GDP is the nation's
total economic output for a given 3-month period. When growth
is too strong, it can cause demand for goods and services to outstrip
supply. That, in turn, allows businesses to charge more, fueling
inflation. For the most recent GDP data, click here.
Retail Sales -- This monthly report, which comes from the
of the Census, tallies sales at retail stores. It's important
because the Federal
Reserve Board doesn't want people spending too much too quickly
for fear that could cause the economy to overheat, driving inflation.
For the most recent Advance Retail Sales data, click here.
Home Sales/Existing Home Sales -- These two reports come out
monthly. New home data comes from the Census Bureau while existing
home sales data comes from the National
Association of Realtors. Both reports are important because
they measure consumer demand for homes and loans. They also contain
information about home prices. For the most recent New Home Sales
data, click here.
For the most recent Existing Home Sales data, click here.