Understanding Mortgage Rates | dripp inc | Home Equity | Refinancing and Remortgage Guide

Good Morning,

The quarterly Gross Domestic Product was reported to be lower than economists forecasted. I was right on the money with this prediction. The bond market has been rallying since 8:30am. Hopefully you waited until today to lock your mortgage interest rate as I suggested. Also, the weekly unemployment report showed 50,000 more claims than expected. That is good news for the bond market and mortgage interest rates.

Here is what’s going on:

The real credit for the hint of our revitalizing economy lately was really due to government assistance. For example, the economic stimulus plan and additional tax rebates are two of the major causes for the more upbeat economic news the last two quarters. Even Consumer Confidence was surprisingly higher than expected on Tuesday and it makes sense after a person receives extra cash from the government. What’s happening now is that the tax rebates are fading and it is starting to show through the slow down of the GDP, which is the all-inclusive measure of our economy.

The other important economic data that was released today is the weekly Jobless Claims report. It showed a reading of 448,000 new claims, which was 50,000 more claims than the forecast. This also helped the bond market rally this morning. However, this is only a weekly report, which does not give the most accurate indication on our employment situation. Tomorrow’s Employment Situation report is the one to follow. I have a feeling that the results will be pretty close to what was forecasted or worse. This will help the bond market again and we could see better rates tomorrow as well. I would lock today to be safe if you are purchasing or refinancing and pay attention to tomorrow’s report. You can always relock your mortgage if rates get better.

Simply Put: The quarterly GDP Report, which is the all-inclusive measure of our economy and the weekly Jobless Claims report came in worse than expected today and the bond market is rallying. This has already helped mortgage interest rates this morning. As I have said before, if the actual results are worse than the expected results investors typically pull out of the stock market and get into safer investments such as bonds. Lock in your mortgage rate today to be safe and watch out for tomorrow’s monthly employment situation.

Please e-mail me at Savvas@drippinc.com with any questions or to be added to our mailing list.