Weekly Economic Summary 12-5-2012
Last Week in Review (November 26 - 30, 2012)
Table Source: Mortgage Success Source
As we head into 2013, tax cuts for individuals and various tax breaks for businesses are due to expire, taxes pertaining to President Obama’s healthcare law will begin, spending cuts enacted by Congress as part of the debt ceiling deal of 2011 will go into effect, and long-term jobless benefits will expire.
The Congressional Budget Office (CBO) estimates that if all of these items occur, it could take an estimated $600 billion out of the U.S. economy in 2013, pushing the country into a recession. This is the “fiscal cliff” we’re heading toward.
And while Congress and the President need to find a way to resolve these issues, the uncertainty here at home combined with continued uncertainty surrounding the debt crisis in Europe has benefitted our bond market, as investors see our bonds as a safe haven for their money. Since home loan rates are tied to mortgage bonds, they have also benefitted.
Also helping bonds and home loan rates last week was the news that inflation, as measured by the Core Personal Consumption Expenditure, remains limited. Remember inflation has a negative effect on bonds (and therefore home loan rates) because it reduces the value of fixed investments like bonds. In other news to note, new home sales for October came in lower than expected and September’s numbers were also revised lower. There was some good news in the housing sector: Home prices in the September Case Shiller Home Price Index 20-city composite increased 3.0% from September 2011.
The bottom line is that now is a great time to consider a home purchase or refinance, as home loan rates remain near historic lows.
In the news this week (December 3 - 7, 2012)
Table Source: Mortgage Success SourceAuthor Bio: Rob Alley earned a bachelors degree at Virginia Tech, in Blacksburg, VA in Biology. Rob Alley consults with homeowners regarding Real Estate transactions and speciliazes in listing and selling Charlottesville Real Estate. Realtor/Owner of Virginia Real Estate Solutions at RE/MAX Assured Properties
Charlottesville Real Estate Experts
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