Service sector shines in the US amid the COVID-19 pandemic
The US weekly economic reports suggested a stronger than expected result. While investors remain concerned about the impact of the COVID-19, the mortgage rates dropped to record low rates. This is the second consecutive week that the mortgage rates have trickled downwards. The economy had suffered a partial lockdown due to the COVID-19 pandemic. The weekly report has shown that economic recovery might happen at a faster rate than analysts had earlier predicted. The ISM Services Index went up from 45.4 to 57.1 in one month. This was a much faster recovery than forecasted. Values above 50 suggest that the service sector has seen growth during this period. The investors are keeping a close eye on the ISM services index as the service industry accounts for more than two-thirds of the US economy.
Now that the economy has shown early signs of quick recovery, investors are wondering if the trend will continue until full recovery is achieved. As some states in the US have shown declining COVID-19 cases, other states have seen a sharp rise. This has been a concerning pattern for investors, who are concerned that lockdowns in other states might drag the economy to slow down. However, reduced economic activity has also reduced the forecast for inflation which has resulted in lower mortgage rates.
The MBA (Mortgage Bankers Association) and Freddie Mac, a federally chartered mortgage investor. reported mortgage rates for a 30 year fixed loan to be lowest in history of recorded mortgage rates. The applications to buy a home have increased by 33% and refinancing by 111%, according to the MBA. The CPI (Consumer Price Index) report which determines the chance in price fo goods will be closed awaited by the investors, who are also keeping an eye on the government’s policy regarding stimulus packages, Fed monetary actions, and medical advances. One of the key indicators of the economy is retail sales as consumer spending is more than 70% of the economic activity in the country. For investors interested in Naples, FL market, the weekly Naples mortgage report would be useful. The full economic recovery is a long way to go, but early economic indicators have been encouraging. However, investors are cautiously waiting for more evidence that the economy is stable and will continue to recover without further hiccups. Even with stables mortgage rates for the moment, with COVID-19 spreading to the other states, it is difficult to predict how the rates will respond in the coming weeks.
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Disclaimer: This content is for informational purposes only. Our blog is an opinion about current market conditions. Annual percentage rates are only provided when exact rates quotes are given when borrowers provide credit score, purchase price, down payment and loan product is requested. The rates provided above are national averages and should not be considered without consulting our office.
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