Mortgage Rate Update Houston, TX

Ratewatches Lou Barnes bring us some good mortgage rate comnetary for Houston and Texas mortgage rates.

Gradually improving US economic data and a Greek deal of some sort have relieved immediate financial fears, and so bond and mortgage rates have risen.  The rate increase is proportional to the relief. 10-year T-notes have moved from 1.92% to 2.02%, and mortgages from just under 4.00% to just under 4.125%, roughly like your kid’s fever dropping from 105 to 104.5.

However, the kid here is in a lot better shape than the kid in Europe. The most reassuring news here is the up-trend in the small business survey by the NFIB. Although its overall optimism is little better than the bottom of recessions going back 25 years, it has been improving each month since August, and only two months since 2007 have had better readings. The weakest internal component
has been sales, now the worry fading fastest.

Another legitimate breakthrough: weekly claims for unemployment insurance have dropped again, to 348,000 last week. Wobbling near 350,000 in the last couple of months has been a straight-line decline from the 400,000+ range of the last two years, and is only about 25,000 weekly above what anyone would consider normal. However, everything about this cycle is so abnormal that nobody knows if normalized layoffs will translate in to normal hiring.

More good news: inflation is not a problem. CPI arrived for January +.2% both overall and core, and in the last year overall +2.3% core and +2.9% overall. The numbers don’t seem to do much for inflation anxiety, most of which is based on conspiracy theories of one kind or another.

With us always is the cooked-books crowd. Never mind the impossible complexity of getting the dozens of inflation reports from Bureau of Labor Statistics, Commerce Department, and Fed all to tell the same false story. People who believe in rigged reports also invariably believe that government is incompetent; if so, how is a pack of fools to run such an elegant conspiracy?

A branch of this bunch objects to updating the “market basket” of goods and services to reflect current consumption. This subset also loves the horror stories of atypical consumers: a family putting a kid through college feels price pressure that a retired couple does not. There is no arguing with those who want the world never to change. Today, keeping a horse in New York City is unimaginably expensive; 100 years ago in that city a horse was the common possession of a lower-class merchant.

A serious concern, historically, is the tendency of government to print its way out of debt trouble — especially when so many authoritative voices (responsible and not) say that the Fed is “printing money” right now.

Of all the things that I discuss with my ceiling at 3:00AM, US money-printing is the least. For three reasons. The Fed is printing money to replace money that frightened banks and investors are withdrawing and burying in their back yards. If new money is in balance with money withdrawn, no inflation; the new money prevents deflation.[fbshare]

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