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American Market Still Heading Downwards
As if things weren't bad enough in the US housing market, with foreclosures still a massive problem and prices and sales still falling in most states, Freddie Mac's weekly mortgage rate survey shows a 22 basis point rise in the interest rate for 30 year fixed rate loans, taking the rate higher than it has been since August.
This, following last week's report on tightening lending criteria is a bleak happening for an already worn market.
Freddie’s chief economist Frank Nothaft attempted to explain the rise, he said:
"Rates on 30-year fixed-rate mortgages were up to the highest level since early August and rates on shorter-maturity loans rose as well, although by somewhat lesser amounts. Retail sales. rose by nearly twice the consensus in October and represented the strongest gain since March.
Moreover, consumer sentiment, as measured by the University of Michigan, ticked up in November to the highest level since June,” said. However, some analysts have been quick to point out that rate rises usually indicate data turning in favour of the lenders, and have in fact used it as justification for suggesting the market will turnaround in the middle of next year.
Okay, a 22 basis point rise is not huge, but it can hardly be called good either. If we look around the world, the only countries that have seen rates rise are those with solid expansion in the housing market, like Canada and Australia. The fact that American banks are doing so with no such positive expansion has to be worrying?