housing slowdown expected to affect retail

Rising energy costs, coupled with a slowdown in the housing markets across the country, is likely to put a crimp in retail spending in 2006.

That was the outlook presented Monday at the National Retail Federation's annual convention. The normally optimistic group is tempering its forecast this year, calling for a 4.7 percent growth in 2006 retail sales down from a 6.1 percent gain in 2005. Real consumer spending, which rose 3.7 percent last year, will increase only 2.8 percent this year.

Freddie Mac estimates that about $205 billion was extracted from home values in 2005, up from $142 billion in 2004. A study by Federal Reserve economists found that money from home values added about $700 billion to economic activity last year, which translates into as much as 8 percent of total consumer spending. The numbers for 2006 are expected to be lower.

Major Lenders Compared

As of January 5, 2006, the current nationwide average for a 30 year fixed rate mortgage is 6.21% with 0.50 points. Last year at this time, the 30-year FRM averaged 5.77 percent.
Assuming a 30 year fixed loan on a single family residence in California valued at $400,000 with a $300,000 loan amount, on a borrower with good credit, with a point program around 1 point - lets see how the interest rates offered by the major lenders are doing in comparison to the national average:

• Bank of America - 6.00% with 1.075 points. APR = 6.173%
• Chase - 6.00% with 0.875 points. APR = 6.082%
• Citibank - 6.125% with 0.750 points. APR = 6.295%
• CountryWide - 6.375% with 1.000 points. APR = 6.497%
• Ditech - 6.000% with 1.000 points. APR = 6.136%
• ELoan - 6.000% with 0.651 points. APR - 6.1000%
• ETrade - 5.750% with 1.125 points. APR - 5.994%
• Indy Mac Bank - 6.000% with 0.875 points. APR - 6.133%
• Union Bank of California - 6.375% with 1.000 points. APR - 6.505%
• Wachovia - 5.750% with 0.125 points. APR - 5.869%
• Washington Mutual - 6.000% with 0.875 points. APR - 6.117%
• Wells Fargo - 6.125% with ? points. APR - 6.353%

Of the major lenders, Wachovia blows away the competition with an APR of 5.869%, and only 0.125 points. (APR is the effective annual interest rate once points and fees are factored into the cost of the loan)