As I expect much of the "green shoot" spending in the past 3-5 months has been the return of the house ATM plus income tax returns, along with transfer payments from government's (cutting payroll taxes) the road is not so easy in the coming 6-9 months if rates stay here or increase. 2 of the 3 "benefits" (tax returns, house ATM) dissipate and the "energy tax" returns as oil goes higher and higher. But other than that, I encourage the purchase of consumer discretionary since that's what you buy when the consumer 'is back'.
We'll see how much longer we can continue to ignore reality on the ground due to "squiggly lines" on charts saying the stock market must be bought.
- Mortgage applications in the U.S. dropped last week as the biggest jump in mortgage rates in seven months pushed down refinancing. The Mortgage Bankers Association’s index of applications to purchase a home or refinance a loan fell 16 percent to 658.7 in the week ended May 29, from 786 the week before. The group’s refinancing gauge plunged 24 percent, while the purchase measure increased 4.3 percent. The mortgage bankers’ refinancing gauge decreased to 2,953.6, the lowest level since February. The share of applicants seeking to refinance loans fell to 62.4 percent of total applications from 69.3 percent.
- An improving economic outlook in recent weeks has pushed up borrowing costs and caused homeowners to shy away from refinancing. At the same time, prices are still declining and borrowing costs are below year-earlier levels, making housing more affordable to some prospective buyers and helping to stabilize the market. (that's a fair assessment)
- The average rate on a 30-year fixed-rate loan rose to 5.25 percent, the highest level since January, from 4.81 percent the prior week.
- Coldwell Banker is lobbying Congress for a $15,000 tax credit for all homebuyers, rather than the $8,000 credit provided to first-time purchasers by the Obama administration’s stimulus plan.