30yr fixed 4.25%
15yr fixed 3.75%
5/1 ARM 3.25%
FHA 30yr fixed 4.25%
FHA 15yr fixed 3.875%
FHA 5/1 ARM 3. 375%
Below Average GDP Growth
Uncertainty about the pace of the economic recovery pushed mortgage rates down to another record low this week. The economic outlook is for slower than normal economic growth with low inflation, which is favorable for mortgage rates. The risks of a "double dip" recession and deflation also increase demand for relatively safer investments such as mortgage-backed securities (MBS).
The consensus economic outlook is for slower than average economic growth for several years. The Gross Domestic Product (GDP) report released this week was consistent with this view. GDP increased at a 2.4% annual rate during the second quarter of 2010, which was below the long-term average of about 3.0% per year. With a high Unemployment Rate, below normal economic growth is far from ideal for the labor market, but this is what investors expect. If the economy performs much more poorly, however, the consequences could be severe. The Fed's Bullard stated this week that he is worried about the risk of a deflationary period in the US similar to that of Japan, which would be very undesirable for the economy, but which would likely lead to lower mortgage rates. He emphasized that he thinks that the most likely scenario is for continued modest economic growth.
The best steps to take to stimulate the economy are being highly debated right now. It's not clear whether further monetary stimulus from the Fed would be effective enough to offset the downside effects. As a result, most Fed officials feel that they should not take additional actions unless the economy experiences a major downturn. Given enormous budget deficits, fiscal stimulus (more government spending) is also a highly contested option. The Fed's Fisher pointed to uncertainty about government policies and regulations as a major obstacle for faster growth, but this may not change very quickly. In any case, if the economy follows the expected path for modest economic growth, it may be difficult for the Fed or the government to launch any major new stimulus actions.
Also Notable:
June New Home Sales rose 24% from a record low level in May
Consumer Confidence fell to the lowest level since February
The Fed's Beige Book painted a picture of slow economic growth in most regions
The Obama administration will provide a "comprehensive housing finance reform proposal" by Jan. 2011
* All material Copyright © Ress No. 1, LTD and may not be reproduced without permission.
Brandon Roy
NMLS #119434
Residential Lending
Fairway Independent Mortgage Corporation
Cell: 206-229-3944
Fax: 425-943-7725
Email: broy@remedygroupmortgage.com
http://www.fairwayindependentmc.com/
30yr fixed 4.25%
15yr fixed 3.75%
5/1 ARM 3.25%
FHA 30yr fixed 4.25%
FHA 15yr fixed 3.875%
FHA 5/1 ARM 3. 375%
Below Average GDP Growth
Uncertainty about the pace of the economic recovery pushed mortgage rates down to another record low this week. The economic outlook is for slower than normal economic growth with low inflation, which is favorable for mortgage rates. The risks of a "double dip" recession and deflation also increase demand for relatively safer investments such as mortgage-backed securities (MBS).The consensus economic outlook is for slower than average economic growth for several years. The Gross Domestic Product (GDP) report released this week was consistent with this view. GDP increased at a 2.4% annual rate during the second quarter of 2010, which was below the long-term average of about 3.0% per year. With a high Unemployment Rate, below normal economic growth is far from ideal for the labor market, but this is what investors expect. If the economy performs much more poorly, however, the consequences could be severe. The Fed's Bullard stated this week that he is worried about the risk of a deflationary period in the US similar to that of Japan, which would be very undesirable for the economy, but which would likely lead to lower mortgage rates. He emphasized that he thinks that the most likely scenario is for continued modest economic growth.The best steps to take to stimulate the economy are being highly debated right now. It's not clear whether further monetary stimulus from the Fed would be effective enough to offset the downside effects. As a result, most Fed officials feel that they should not take additional actions unless the economy experiences a major downturn. Given enormous budget deficits, fiscal stimulus (more government spending) is also a highly contested option. The Fed's Fisher pointed to uncertainty about government policies and regulations as a major obstacle for faster growth, but this may not change very quickly. In any case, if the economy follows the expected path for modest economic growth, it may be difficult for the Fed or the government to launch any major new stimulus actions.
Also Notable:June New Home Sales rose 24% from a record low level in MayConsumer Confidence fell to the lowest level since FebruaryThe Fed's Beige Book painted a picture of slow economic growth in most regionsThe Obama administration will provide a "comprehensive housing finance reform proposal" by Jan. 2011
* All material Copyright © Ress No. 1, LTD and may not be reproduced without permission.
Brandon RoyNMLS #119434
Residential Lending Fairway Independent Mortgage Corporation
Cell: 206-229-3944
Fax: 425-943-7725
Email: broy@remedygroupmortgage.com
http://www.fairwayindependentmc.com/