Consumer Confidential: Mortgage rates drop, food and fuel prices rise, 401(k)s grow
--In the market for a new home? The time might be right. Fixed mortgage rates have fallen to their lowest levels of the year, giving would-be home buyers more incentive to cut a deal or refinance existing loans. The average rate on a 30-year loan has fallen to 4.63% from 4.71%. The average rate on a 15-year fixed mortgage slipped to 3.82% from 3.89%. Both are at their lowest points since December. It marks the fourth straight weekly decline. Low mortgage rates could boost the struggling housing market, which has been a drag on the economy. Home sales are far below healthy levels. Most home builders reported a drop in new orders in the first three months of the year, an indication of future activity.
--Stuff's getting more expensive. Wholesale costs rose more than forecast in April, led by higher prices for food and fuel. According to Labor Department figures, the core measure, which excludes volatile food and energy costs, climbed 0.3%. Factoring in food and fuel, and we're looking at a 0.8% increase in the producer-price index. Rising costs may lead businesses to increase prices, boosting the cost of living for consumers. A separate report from the Commerce Department shows that retail sales rose 0.5% in April, reflecting gains at service stations and grocery stores.
--Some good news for a change: The average balance of 401(k) retirement accounts managed by Fidelity Investments rose to $74,900 at the end of the first quarter, the highest level since the company began tracking balances in 1998. That's an increase of 12% from a year ago. And compared with 2009 account balances have increased about 58%. About two-thirds of the increase can be attributed to stock market growth and one-third is the result of workers' own added contributions and company matches. Fidelity finds that workers who have saved continuously with the same employer for at least 10 years have amassed an average balance of $191,000. For the 10-year continuous contributor aged 55 or older, the average balance has reached $233,000.
-- David Lazarus
Photo: Looking for a new home? Mortgage rates are at a low for the year. Credit: Larry Downing / Reuters