THE BASIS POINT

WeeklyBasis 10/15/03: Rates Up on Weak Retail Sales

Rates and commentary below are as of October 15. Sorry for delay, I was out ill earlier this week. Rates on 30-yr and 15-yr loans are up about 0.25 from last week, but rates on ARMs are holding steady near record lows. Retail sales figures released this morning showed the first decline in five months, led mainly by weak auto sales. Retail sales are an important economic indicator for the next few months, as we see whether tax refunds, cash-out refinancing funds, and zero rate incentives from automakers have helped (and will continue to help) bolster the economy. On Thursday, the Consumer Price Index (a key measure for inflationary pressures) will be released. If this number is higher than expected, it could cause near-term rate increases as investors sell bonds and buy stocks. Also, Intel releases quarterly earnings at close of market today which, if numbers are strong, could cause traders to move from bonds to stocks. Overall, an improving economy is not great for near-term rates, but it is good for consumer confidence and the job market – and this is good for the home purchase market.

Conforming ($50K – $322,700K) – NO POINTS
30 Year: 6.0% (6.14% APR)
15 Year: 5.375% (5.515% APR)
5/1 ARM: 4.75% (4.90% APR)

Jumbo ($322,701 – $650,000) – NO POINTS
30 Year: 6.25% (6.39% APR)
15 Year: 5.625% (5.765% APR)
5/1 ARM: 4.875% (5.025% APR)