Consumer Sentiment Indices and the State of the American Psyche

The Mortgage Voice
The Mortgage Voice
Consumer Sentiment Indices and the State of the American Psyche

It’s almost spring buying season, the time of year when people usually decide to sell their homes. Everybody’s excited, there’s a rush of new product to the marketplace, prices are stabilized, and mortgage rates enable many buyers to afford to purchase a house.

Unfortunately, that’s not happening in the present economic climate, with housing inventory, mortgage and inflation rates, and war affecting not only the American psyche but also the actual price in the marketplace. How do buyers and sellers feel about transacting business, especially with conditions as they are now?

Different indices reflect the temperature of the buying public. One such is the Michigan Consumer Sentiment Index (MCSI), a monthly survey of how consumers feel about the economy, personal finances, business conditions, and buying conditions, and that sentiment changes constantly. The economy is currently in a precarious state, making it hard to depict what consumers are thinking accurately. The economy looks good, but the economic news is not great, and the stock market is erratic, yet half a million people were hired last month. Will there be a recession? It’s unclear what is truly going on.

Normally, the rate for mortgages is very steady in a spring buying season with more housing on the market, but not this year. It’s uncertain where mortgages are headed because they don’t appear to be following their usual indicator, the 10-year treasury note.

The FED is likely planning to raise interest rates, which in turn will impact mortgages, through the FED funds rate, the overnight interbank rate banks charge each other for the liquidity required to stay in business by the federal government. It’s a large number designed to reduce excess money in the marketplace and help cool inflation, but last year’s added trillion dollars in mortgage debt has done little to achieve that goal.

The number of homes available on both the rental and purchase sides is not enough to satisfy consumer demand, hurting affordability and driving mortgage interest rates higher because banks know they will get more money on the limited supply. Given all of these factors contributing to the condition of the American psyche, the Michigan Consumer Sentiment and other Indices point to a very confused market indeed. This week, Jeff’s guests include:

– Audrea Johnson (ACC) discusses programs for self-employed clients.

– Relationship Trainer Dr. Jeannie Bertoli talks about affirmations for life and wealth.

– Julie Reis (ACRA Lending) explains alternative lending.