U.S. Treasuries prices rose this morning (good for lower mortgage rates) as news the U.S. economy grew at an even slower pace in the first half of the year than was previously estimated, raised yet more fears the economy was at a real risk for recession. Gross domestic product, a measure of all goods and services produced within the United States, shows that output increased at a 1.3 percent annual pace in the second quarter. According to Commerce Department data, the economy advanced just 0.4 percent in the first three months of the year, which is significantly lower than the previously reported 1.9 percent gain.
Mortgage rates eased slightly lower this morning on the GDP data. Negative data is bad for the economy as a whole, but good for mortgage rates, which move lower when investors move into the safety of bonds.
‘Economic growth … was much weaker than the government had previously estimated and this opens the door for potentially another round of quantitative easing from the Federal Reserve,” said Gary Thayer, chief macro strategist at Wells Fargo Advisors in St. Louis. “Therefore, the bond market responded positively to the weak GDP number while the dollar weakened.”
Debt Ceiling Fears Linger
Also continuing to weigh on the markets is the uncertainty around a resolution to the debt ceiling debate in Congress. The continued uncertainty has helped suppress mortgage rates, keeping them at extremely low levels.
Consumer Sentiment Index Reaches Lowest Level Since 2009
All of the negative economic data is not only being felt by consumers but showing in consume sentiment numbers released today. The Thomson Reuters / University of Michigan’s index of consumer sentiment came in at 63.7, down from 71.5 in June, the lowest reading since March 2009.
While the economic outlook and data of late is not great, this means that now is an outstanding time to make sure you are saving as much money with your mortgage as possible. Since mortgage rates will not stay are their current low levels for long, now is the time to ask us how we can help you lower your existing rate or get the lowest rate on your new home purchase loan.