Mortgage rates set new lows for 2011 yesterday, fresh off a week that saw more negative economic data released and the biggest Dow plunge since 2008, with a total loss of 512.76 points. The loss was fueled by ongoing concerns in the markets about US debt, ongoing weak economic data, the possibility of a second recession and the possibility of a downgrade for US debt and ongoing debt crisis in Europe.
Today rates rose slightly on better than expected employment numbers. The U.S. economy added about 117,000 new jobs in July, coming in higher than the 46,000 jobs added in June. The street had expectations of 75,000 new jobs this month. The unemployment rate also showed a slight sign of improvement moving down to 9.1 percent, from 9.2 percent.
Getting Technical: Frank Nothaft, vice president and chief economist, Freddie Mac Speaks
“Treasury bond yields fell markedly after signs the economy was weaker than what markets had previously thought allowing fixed mortgage rates to follow this week with the 15-year fixed and 5-year ARM setting new historical lows. The economy grew 1.3 percent in the second quarter, which was below the market consensus forecast, and first quarter growth was cut to less than a quarter of what was originally reported. In fact, the first half of this year was the worst six-month period since the economic recovery began in June 2009. Moreover, consumer spending fell 0.2 percent in June, representing the first decline since September 2009.
“On a positive note, there were indications that the housing market is firming. Real residential fixed investments added growth to the economy in the second quarter after subtracting from growth over the first three months of the year. The CoreLogic® National House Price Index rose for the third straight month in June (not seasonally adjusted) and was the first three-month gain since June 2010. Finally, pending existing home sales rose for a second consecutive month in June and was up nearly 20 percent from June 2010 when the housing tax credits expired.”
Time and time again, rates have moved downward on a flood of negative economic data over the past month(s). While this has provided a record breaking window for locking low mortgage rates, the market will see mortgage rates move higher as the pendulum begins to swing the other way. The question is not if, but when, mortgage rates will increase. Not locking in low rates now is taking a gamble, we can help you lock in savings that will not be around for long.