Mortgage Rate Update August 2, 2011

Mortgage rates are priced better again today.  Interest rates are now at the lowest level since November of last year when the Fed announced QE2.

Now that the debt-ceiling crisis appears to have been averted focus is back on the US economy and the news isn’t good.  Late last week GDP figures were reported less than expected.  Today, the Commerce Department reported that consumer spending fell .2% in June; the biggest drop in nearly 2 years.

The deficit reduction legislation that is expected to become law in the next 24 hours will enact government spending cutbacks that will likely weigh on economic growth moving forward.  Stocks are trading lower again today which is helping to keep interest rates low.

I’ve been in a floating position since late last week and mortgage-backed bond prices have rallied since then.  Beginning tomorrow we get 3 days of significant economic data.  Should the data disappoint we may see rates creep lower and vice versa.

Current Outlook:  floating