Our borrowers are impacted by rates, and we want to make sure that our clients know what is happening with them. And here, as we ease into the May, are signs that the U.S. economy is moving, and wants to move, forward. Not only is it springtime, but as more people are vaccinated more portions of the economy are opening up. Unemployment, although bumpy, has generally been showing reductions, and there is optimism out there.

Yes, as the calendar moves into the second quarter, U.S. economic data points to an economy that is gaining momentum as the long-awaited consumer boom has arrived. Total retail sales were 17 percent higher in March than they were prior to the pandemic, and every subcategory of store benefited from consumers’ desire to spend. Given that a portion of this spending was due in part to the generous stimulus most households received, the question of how sustainable this elevated spending is top of mind. Many economists point to much improved household balance sheets buoyed by heightened savings over the last year as potential fuel for successful service re-openings this summer. This assumes businesses, which are currently struggling to hire, can find workers to fill the expected demand.

Surging demand also brings inflation concerns, and higher rates, including mortgage rates. Consumer prices were up 2.6 percent in March compared to one year ago, and while last year’s low baseline will lead to elevated annual comparisons, recent inflation readings pointing to increasing prices. Despite those concerns, our loan officers and management have noted that the Fed continues to say it will wait until it feels higher prices are sustainable before making any major changes to monetary policy which could leave the near-term direction of rates up to market sentiment. This is good news for our borrowers, as no one who hasn’t locked in a rate appreciates rates moving higher, regardless of the reason.