Rate Update for July 31, 2008
Mortgage rates have improved modestly this morning after an economic report showed surprisingly week data.
The Labor Department released their quarterly report on Gross Domestic Product (GDP) which showed that 2nd quarter GDP grew at a 1.9% pace, far less than economists had been expecting. Furthermore, the report revised the 4th quarter of ’07 lower to reflect the first economic contraction since the recession of 2001 (remember that a ‘recession’ is defined as two continuous quarters of economic contraction). Bad news for the economy is often good news for mortgage rates and this is holding true this morning.
Tomorrow brings the monthly jobs report. If you’re an avid reader of ‘rate update’ you know that over the years this report can have a substantial impact on the direction of mortgage rates over the next few weeks (to understand why read this link).
Our strategy going into tomorrow’s report is for locking. We have no reason to believe that the jobs number will fall short of already low estimates (70,000 job loss). Furthermore, since last week rates have improved by .25% and we are advising our clients to “lock-in” the gains.