Mortgage Rates at Lows for 2011
Mortgage rate locks nearly doubled over the past couple days, as rates continuously fall and are at new lows for 2011. The 2nd quarter GDP figures released last Friday are a big contributor to the low rates, indicating that the economy is only growing at a 1/3% pace versus the expected 1.8%. With such a disappointing economic outlook, equities took a turn for the worse as investors plunged money into U.S. Treasuries.
This week, there are still several economic reports remaining that will be important to watch. The debt ceiling appears to be less of a concern today as Congress has now agreed on a general framework to raise the debt ceiling and enact spending cuts. Attention has started to turn back toward the economy and debt issues that persist in Europe (with close attention to Italy and Spain this week). Such weak economic data has caused investors to flee for the relative safety that lies within U.S. Treasury bonds.
That being said, keep an eye on the rating agencies; if they do not view the congressional changes as enough to retain an AAA debt rating, rates will inevitable rise as the U.S. will be viewed as a higher risk. Friday’s July Employment reports will also be an important indicator, with 90,000 new jobs expected. If July employment looks anything like the prior month (around 18,000 new jobs), you could see improved rates.
Recently, we published information about higher loan balance agency insured loans (also known as Agency Jumbo loans). We have now closed within the two-month deadline to get these loans closed before the agencies (i.e. Fannie Mae and Freddie Mac) no longer insure these loans. In this low rate environment, we have seen an increase in these mortgage applications as affected borrowers work to get these loans closed prior to the deadline. Information around impacted loan limits by county can be obtained on the HUD website, and Guaranteed Rate is always happy to help you identify if you are impacted.