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Do you shop at Walmart? This could have something to do with mortgage rates coming down in the future. We’ll get into that soon. However, we had a pretty stable week for mortgage rates, actually dipping below 7% before ending up a little above 7%. We’ll take it!
This was an important week with inflation data. Fortunately, it came in as expected with Core CPI going down from 3.8% to 3.6%, still a long ways away from the Fed's target of 2%.
There are over 100,000 data points that make up the CPI. Right now, only two components make up 3.3% of the 3.6% Core CPI inflation: shelter and motor vehicle insurance.
All the other components make up the remaining 0.3%. So, if it weren’t for the lack of more affordable housing and fancy new cars with cameras and high-tech auto components, inflation is actually pretty much in tact.
Inflation has acted as a “beat down” effect on the consumer. Not only has credit card debt gone up by over 50% since 2021 to well over $1.2 trillion, the consumer is now paying as much as 25% interest on credit card debt instead of 14%. People are living on credit. Yikes!
Now, back to whether or not you buy at Walmart. Walmart typically thrives in a recessionary period because of their low-cost pricing structure. They are now seeing more upper- and middle-class shoppers buying at Walmart to take advantage of the lower prices. Another sign the consumer is struggling.
Quick story: We had a consultation recently with a buyer who has $180,000 in credit debt in addition to their mortgage. The good news is they bought a home 4 years ago. They are now selling the home, paying off all their debt, putting $90,000 into their bank account, and going from total monthly debt payments of almost $10,000/month down to $4,300/month!
The equity in their current home saved them. There are likely other families that may be in a similar situation. Sometimes, selling a home and using equity in the right way can make life way easier and let you sleep better at night.
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