What should you look at when deciding where interest rates are headed?

What should you look at when deciding where interest rates are headed? There are hundreds of different reports, charts and news items released every quarter help economists determine where interest rates are headed. The following are particularly useful for mortgage shoppers:

The core Consumer Price Index -- The federal Bureau of Labor Statistics releases this data every month. The core index measures what consumers are paying for goods and services at malls, grocery stores and other retail locations. Unlike the overall CPI, it excludes food and energy prices, which can bounce around enough each month to distort the overall price trend picture. Buyers should pay attention to the report because it's one of the most important indicators of inflation. High inflation equals high interest rates. Low inflation allows interest rates to fall.

Employment Cost Index/Average Hourly Earnings -- These two data sets are also put together by the BLS. The ECI comes out quarterly while the Employment Situation report containing the earnings figures comes out monthly. The ECI measures changes in employee wages, salaries and benefits, while the AHE number shows how worker wages are changing month to month. Both are important because rapidly rising labor costs can force businesses to raise prices to compensate, spurring inflation. For the most recent ECI data, click here. For the most recent AHE data, click here.

Gross Domestic Product -- This report comes from the Bureau of Economic Analysis, which releases an advance, preliminary and final estimate of each quarter's GDP. GDP is the nation's total economic output for a given 3-month period. When growth is too strong, it can cause demand for goods and services to outstrip supply. That, in turn, allows businesses to charge more, fueling inflation. For the most recent GDP data, click here.

Advance Retail Sales -- This monthly report, which comes from the Bureau of the Census, tallies sales at retail stores. It's important because the Federal Reserve Board doesn't want people spending too much too quickly for fear that could cause the economy to overheat, driving inflation. For the most recent Advance Retail Sales data, click here.

New Home Sales/Existing Home Sales -- These two reports come out monthly. New home data comes from the Census Bureau while existing home sales data comes from the National Association of Realtors. Both reports are important because they measure consumer demand for homes, mortgages and mortgage refinancing loans. They also contain information about home prices.

Best Time To Refinance

Todays Topic: Best Time To Refinance

Today's National Averages:
30-yr Fixed 5.81% 6.01% 15-yr Fixed 5.46% 5.79% 5/1 ARM 5.54% 6.8%

Best Time To Refinance Your Home Loan
You bought your home during the housing boom and now after a year or two into your new home you're considering refinancing. The question is, "Is now a good time to refinance your home loan?"

Any lender or broker will likely say sure let's look into it and see how much loan you can afford! But before you even consider talking to a lender you'll want to get some questions answered for yourself.

1. Are you seeking to lower your monthly payments?
2. Do you want to consolidate debt?
3. Do You need cash for large purchases?
4. Are you seeking to adjust your interest deduction expense for tax purposes?

Whether to refinance your home loan depends largely on your immediate and long range financial goals. Once you've answered these questions you'll have a better idea of the actual need you have to refinance. If your needs prove practical you'll then want to start shopping the lowest rates possible. Check local mortgage rates and get three competitive rate quotes. Compare the saving using a mortgage payment calculator. Choose the rate and loan program that's right for you.

Match rates with the more desirable loan program. Many incline toward a 15-year Fixed Cash Out Refinance program. This gives them cash they can pocket to grow their income with a view to refinancing again upon reaching desired income level and the option of choosing a longer or shorter-term loan. 

Beating The Energy Crisis

While British families deal with rising oil prices and bankruptcy reaches a new peak, American families gasp at high-energy bills and cringe over foreign security at American ports. The Bush administration promises a new energy resource as China makes oil deals with Iran. Where is the world heading? For the moment, nowhere it hasn’t already been.

What does this spell for the future? Andrew McKillop author of "ENERGY TRANSITION AND FINAL ENERGY CRISIS" predicted a continued rise in energy prices saying that after the 2004 short-term ‘price crisis’, which can only intensify in the 2005-2008 period, and within at most 10 years, both oil supply and natural gas supply will enter into constant and terminal decline, due to physical depletion.

Policy makers in late 2004 now admit that ‘oil prices will remain high’ because of fast demand growth and slow growth of supply. Solution? Mckillop explains, "Participation in faster development and construction of non-oil, non-gas renewable energy alternatives to fossil fuels, and especially substitutes for oil, will therefore reduce invasion risks for oil and gas exporter countries. The same effort will also reduce ‘threats to economic security’ of the large oil importer nations and groups of nations."

Conserve Energy
Until then each household should take it upon itself to conserve energy in the form of oil and gas while sparing our electric power supply as well. In addition home weatherization and the use of bikes and scooters for short transport will go a long way in staving off the energy crises and extended price wars.

Spend Thrift
With energy bill doubling this spring homeowners would do well to consider ways to reduce spending costs and save money. Home refinancing can cut over 50% off monthly mortgage payments. These funds can then be used to offset high-energy bills.

Save Hard Earned Dollars
Keep your hard earned dollars from going out the window literally. During cold winter months and hot summer days Americans spend more on air conditioning than anything else accept the mortgage and food. That said, investing in weatherization and keeping the temperature at a modest 68 degrees in the winter and 75 in the summer can save hundreds of dollars per month.

Financing Your Gift? Beware Of Hidden Fees

Financing Your Gift? Beware Of Hidden Fees
The average American couple will spend $1,476 this year in holiday gifts, food and decor, according to a recent survey by the National Retail Federation. Many spend three to four times that amount from November to January. That said, during the nations busiest shopping season of the year many consumers will be seeking to finance gifts via credit cards, mortgage refinancing and equity lines of credit...

Today's Low Rates
Avg. Rate Points APR
30 Yr Fixed 5.76% 0.64 5.93%
15 Yr Fixed 5.33% 0.65 5.61%
1 Yr ARM 4.47% 0.55 6.81%

...Some shopper will be completely unaware of the hidden fees andoverall costs of financing extravagant gifts. That said we've put together a list of fees associated with loans used to cover debtacquired from gift giving. Compare and save.

Gifts purchased using... Added fees and charges
Credit Card 10-20% more
Refinancing 6.50-8% more
Home Equity Loans 7-9% more

From the above those who have already refinanced their home mortgages and held funds for gifts may do better in the long run. Still the best approach is not to finance gifts at all.

An alternative is prepaid gift cards. These average $25 per card without fees.

Today the Philadelphia Fed released the findings of its fourth quarter survey of professional forecasters. The contours of the report show that the consensus expects growth to slow markedly in the fourth quarter of 2005, but then accelerate to much stronger growth during the first half of 2006.

Fed fund futures were generally unchanged last week. A light data calendar and a holiday-shortened schedule helped keep most near-term contract prices stable.

Todays Best Rates

Todays Best Rates

30 Yr Fixed 5.64% 0.65 5.81%
15 Yr Fixed 5.23% 0.65 5.50%
1 Yr ARM 4.18% 0.55 6.59%

Today's Mortgage Rate News
Mortgage lenders slightly hiked rates this morning. New Fed Chairman Ben Bernanke
appointed. The Fed to maintain its plans to raise interest rates at what some suspect
will be every meeting this year.

Todays Tips:Brokers will generally contact several lenders regarding your application, but they are not obligated to find the best deal for you unless they have contracted with you to act
as your agent. Consequently, you should consider contacting more than one broker, just as
you should with banks or thrift institutions.

Guide: Ask each lender and broker for a list of its current mortgage interest rates and
whether the rates being quoted are the lowest for that day or week.

Glossary: Loan origination fees are fees charged by the lender for processing the loan
and are often expressed as a percentage of the loan amount.

Need To reduce your mortgage payments? Need cash? Want to lower your debt? Secure your
financial decisions now while rate are low.Best deals: New home mortgage, long term fixed rate home refinancing and home equity loans. 

Risk of Home Price Declines Rising

In the last eight and a half years, the country has experienced an unprecedented run-up in home prices. Over this time, the rise in home sale prices has been more than 40 percentage points higher than the overall rate of inflation. The increase is said to have begun turning in on itself.

It seems that the risk of price declines over the next two years has increased in the nation's 50 largest housing markets, according to the latest PMI U.S. Market Risk Index, whose median risk index value rose 11.6% in the third quarter.

Homes in Gotham got a little more affordable in the third quarter...or rather,prices dropped, but they still remained in nosebleed territory.

It is likely that the regions experiencing the largest run-up in home prices will see the largest fall during the crash. For this reason the New England region is especially vulnerable to a downturn in the housing market.

How would a drop in home price values impact the economy.
In 2002 a research an economic policy and research firm, cepr.net predicted the following:

The collapse of the housing bubble, implying a drop of between 11 and 22 percent in the average of housing prices , will destroy between $1.3 trillion and $2.6 trillion in housing wealth.

7) In the wake of this collapse, residential construction is likely to fall by between 0.6 and 1.3 percentage points of GDP.

8) The loss of this much housing wealth will reduce consumption by between $80 and $160 billion.

9) The average ratio of homeowner’s equity to value, at 55.2 percent, is near its low for the post-war period. A sharp drop in home prices will send this ratio far below its previous low point.

At the present time there is much wealth in ones home. Were one to attempt to capitalize on it the only way to sustain that wealth would be to turn it over into high yield investments and turn over the returns as well. In other words the equity wealth would be made to make income at a rate that offsets the mortgage payments that far exceeding the home value.

Many homeowners first lowered the mortgage rates in order to free up funds for such an investment. Other then took out home equity loans purely for the purpose of investment and debt resultant debt reduction.

Using ones home as collateral is always a last option when needing funds. Still when there is no option many have used some of the borrowed funds to invest in education, small businesses or purchase precious metals or some other more certain profit generating venture.

Offsetting debt by investing for higher returns in or to pay off debt more quickly is always the wisest course to take.