A drop in the interest rate could help revitalize the housing market (Getty)
The average US mortgage interest rate fell to less than 7% last week, in its biggest drop since last July, in what was seen as a sign of a turnaround that could allow the return of activity. to the all-important market. for the American economyafter months of slow.
The interest rate applicable to 30-year mortgage loans fell 24 basis points to 6.9% in the week ending Nov. 11, according to data from the Mortgage Bankers Association released on Wednesday.
The group’s home purchase orders index rose 4.4%, the highest level since last June, but remained close to the weakest level since 2015.
The US housing market has clearly stalled over the past five months after rallying Powered The interest several times and the high cost of loans for the purchase of homes, the prices of which have skyrocketed in recent years.
The Federal Reserve has raised interest on its funds six times since last March, for a total increase of 3.75%, in an effort to curb the highest inflation in forty years.
And last week, government data showed a slowdown in price hikes consumers Andmanufacturers Both of which bolstered the Federal Reserve’s chances of slowing rate hikes in the coming weeks, bolstered by statements from bank officials, and contributed to the decline in the cost of home loans.
Last week’s fall in the cost of borrowing allowed the general indicator of mortgage applications, which includes applications for refinancing, to rise for the first time in two months. However, the refinancing activity index fell to its lowest level in 22 years.
Retail sales exceeded expectations
US retail sales beat expectations in October, supported by purchases of cars and a range of other goods, suggesting that consumer spending could help support the economy in the fourth quarter of the year.
The US Department of Commerce said on Wednesday that retail sales rose 1.3% last month. Economists polled by Reuters had expected sales to rise by just 1.0%, with estimates ranging from as low as 0.1% up to 2%. Retail sales are dominated by commodities and are not adjusted for inflation.
Reuters said sales rebounded on rising petrol prices, which led to an increase in the cost of gas stations.
Sales were also boosted by one-time California tax rebates, which have seen some families receive up to $1,050 in stimulus checks. In addition, Amazon held a second promotional day in October, which contributed to the increase in sales.
The huge savings accumulated during the COVID-19 pandemic and steep wage increases in a tight job market have generally helped consumers bear higher prices and the cost of borrowing.
Reuters expects this support to fade next year as monetary tightening weakens aggregate demand, which weighs on the labor market and the economy. Low-income households are believed to have already depleted their pandemic-related savings.
The National Retail Federation this month forecast that holiday shopping will grow between 6 and 8% this year. While this would be down from the 13.5% achieved in 2021, it is well above the 4.9% average over the past decade.
